China probes European pork prices after EU hikes tariffs on its electric cars

London (CNN) — Beijing has launched an investigation into prices of pork from the European Union, targeting a major EU food export just days after Brussels hiked tariffs on electric vehicles from China.

The move risks escalating tension in one of the world’s biggest trading relationships and will heighten fears among EU exporters that Beijing could go after their goods to retaliate against the provisional EV tariffs.

China’s Ministry of Commerce said Monday that local agricultural producers had requested an anti-dumping investigation into pork and pig by-products from the EU and that a preliminary inspection had found sufficient grounds for a formal probe into whether their prices are artificially low.

It added that the investigation should conclude within a year but could be extended by six months if required.

A hike in import tariffs could be very costly for European pork producers if it ends up hurting demand in China, the world’s largest pork market and the main destination for EU pork exports. The EU is the second-biggest pork producer after China.

According to EU customs data, the bloc exported more than €2.5 billion ($2.7 billion) worth of pork, including offal, to China last year. Almost half of that came from Spain, with the Netherlands, Denmark and France also exporting substantial amounts.

Beijing has already launched an anti-dumping investigation into brandy imported from the EU and could impose tariffs that would hit French cognac makers. China could also target European wine and luxury goods, according to analysts at Rhodium Group, a think tank.

Olof Gill, a spokesperson for the European Commission, the EU’s executive arm, told reporters Monday at that the EU would follow the investigation into pork products “very closely” and “intervene as appropriate” to ensure the probe complies with rules set by the World Trade Organization.

Responding to a question about the EU’s considerable agricultural subsidies, Gill added that the bloc was “not the least bit worried” that the WTO could find in China’s favor. “Any subsidies… are strictly in line with our WTO obligations,” he said.

Beijing had been widely expected to use targeted measures to try to dissuade EU officials from permanently adopting higher tariffs on electric cars imported from China, a decision the EU must make by November. The provisional tariffs are due to take effect on July 4.

The European Commission announced last week that additional tariffs of between 17.4% and 38.1% would be applied to EVs manufactured in China on top of the existing EU duty of 10%. That takes the highest overall rate to close to 50%.

Beijing immediately denounced the measure, which could hurt its ambitions to grow EV exports and is likely to hasten efforts by Chinese carmakers to set up factories in Europe.

Brussels is also investigating China’s state support for wind turbine companies and solar panel suppliers amid concerns that the country’s industrial overcapacity is flooding markets elsewhere with cheap exports.

Xiaofei Xu and Maisie Linford contributed reporting.

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