Output Reduction Urged for Chinese Dairy Producers Amid Market Imbalance

Beijing has concluded the first phase of an anti-subsidy investigation by imposing provisional tariffs between 21.9% and 42.7% on European dairy imports. The measures, effective from Tuesday, predominantly result in duties around 30% for most companies. The decision arrives as Chinese authorities push domestic producers to address market imbalances.
Brussels has strongly objected to the decision, calling it unjustified and based on insufficient evidence. The European Commission maintains that the investigation relies on questionable allegations without adequate proof. Officials are reviewing the tariffs and preparing a comprehensive response.
The dispute originated in 2023 when the European Commission launched an investigation into Chinese electric vehicle subsidies. Beijing has systematically retaliated with tariffs on European brandy, pork, and now dairy products. Despite maintaining pressure, China has occasionally demonstrated flexibility in final rulings.
The tariff structure affects around 60 companies with differentiated rates. Arla Foods will pay between 28.6% and 29.7%. Sterilgarda Alimenti received the most favorable treatment at 21.9%, while FrieslandCampina’s operations face the steepest penalties at 42.7%. Non-participating companies automatically receive maximum tariffs.
The decision is likely to be welcomed by Chinese producers who are grappling with a glut of milk and falling prices. China, the world’s third-largest milk producer, urged producers last year to rein in output and reduce the number of older and less productive cows. Declining birthrates and more cost-conscious consumers have dampened demand, making protective tariffs particularly attractive to domestic producers. Last year, China imported $589 million in affected dairy products.