Recently, the trade war between China and Europe has been heating up. You may have heard that the European Union decided to impose a tariff as high as 35% on Chinese electric vehicles. This decision prompted China to take immediate countermeasures, imposing high tariffs on imported Cognac from Europe. It's important to note that Cognac is not just any brandy; it is a spirit with significant historical and cultural value in France, primarily exported to the Chinese market. This tariff dispute has not only affected brand owners but also impacted tens of thousands of French farmers and workers.
To protect its electric vehicle industry, the EU decided to add a 35% tariff on Chinese electric vehicles. Naturally, this decision displeased China, which quickly retaliated by imposing a security deposit ranging from 30.6% to 39% on French Cognac. France produces a large amount of Cognac annually for export, with a clear reliance on the Chinese market.
Cognac is different from regular brandy; it must come from the specific Cognac region in France and be produced through a special process, symbolizing French wine culture. Just as Chinese people associate Maotai with white liquor, the French think of this delicate brandy when they mention Cognac. Cognac brings substantial revenue to France annually, and China is the second-largest export market for French Cognac, accounting for a significant portion of France's overall Cognac exports.
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The French Cognac industry, which relied on the Chinese market for high profits, suddenly faced this tariff crisis, plunging the entire industry into unprecedented anxiety. French Cognac is not just a drink; it represents a complete industrial chain involving more than 85,000 jobs, including grape farmers, distilleries, barrel manufacturers, and logistics truck drivers. French farmers and workers are extremely worried about losing the Chinese market, as this would not only mean losing substantial profits but also lead to a significant loss of jobs.
Some French farmer unions have already taken to the streets to protest, knowing that if French Cognac can no longer be exported to China, the entire industry will be severely damaged. French Cognac merchants, who have made a fortune from the Chinese market, now face a crisis that could cause them to lose an important source of income overnight. Farmers, workers, and even distillery owners understand that if the Cognac industry loses China, it will be very difficult to recover.
French politicians, in an attempt to demonstrate leadership within the EU, chose to support the proposal to add tariffs on Chinese electric vehicles. In fact, this was not a matter that France had to take the lead on. Major European countries like Germany and Italy voted against or abstained, but France firmly voted in favor. As a result, this political gesture directly affected the domestic Cognac industry.
French Cognac producers have become casualties in this Sino-European trade war. Many Cognac producers have expressed that they were not involved in political decision-making but have to bear the consequences. Producers in the southern Cognac region of France have already voiced their protests, fearing that if they lose the Chinese market, the entire industry will not survive. Some even described it as a "fatal blow."
Similar situations have already occurred. Australia's wine industry was once a significant supplier to the Chinese market, but due to political conflicts between China and Australia, China imposed high tariffs on Australian wine. Australian wine exports then shrank dramatically, and many wineries even faced bankruptcy. French Cognac producers worry that they might follow in Australia's footsteps and lose the Chinese market, their largest source of income.
If the Cognac industry falls into such a predicament, the entire industrial chain will be impacted. From grape farmers to Cognac distillery workers, everyone will be affected. This is not just a simple reduction in sales but a decline in the entire industry. And the source of all this is just a voting decision by a few French politicians.
The cost of this trade war has already become apparent. Chinese electric vehicles are thriving in the global market, while the French Cognac industry has become a casualty in this game. Politics determine the economy, and the economic consequences are ultimately borne by ordinary people. The difficulties faced by the Cognac industry force people to think: who benefits from this game, and who is paying the price?
