The ties that bind
Credit: Kam Kong Feng Dim, creativecommons.org/licenses/by-sa/4.0/deed.en
The European dairy industry is concerned with the potential significant impact on European Union (EU) exports to China of Beijing’s imposition of provisional tariffs on dairy products, a problem for which the European Commission is seeking a diplomatic solution.
These countervailing (anti-subsidy) duties, announced by China’s ministry of commerce on 22 December 2025, and collected since the following day, range from 21.9% to 42.7% and impact unsweetened milk, cream, curds and several types of cheese.
According to a note by a ministry spokesman, the decision was taken following an investigation, begun in August 2024 in line with relevant World Trade Organisation (WTO) rules, which indicated that certain EU products have been subsidised1.
European dairy trade organisation Eucolait secretary general Jukka Likitalo told DII that these duties are already having a severe impact on EU exports of cheese and cream to China. “The additional tariff rates of at least 28.6% on top of the existing most-favoured nation import tariffs [for example, standard tariff rates a country applies to imports from other WTO members] of 8% (cheese) and 15% (cream) make European products uncompetitive” in China, he said.
“The EU exports around 30,000 tonnes of cheese and 100,000 tonnes of cream annually to China [on average in recent years], he said. But, in 2025 (January-November), “We already saw a [year-on-year] reduction of 32% in EU cream exports to China, and a 5% decline for cheese, probably in anticipation of the additional duties,” he added.
Still, Likitalo expects EU dairy businesses to adjust to the tariffs, without foreseeing layoffs and bankruptcies, since China only accounts for around 3% of EU cheese exports, 0.3% of cheese EU production, plus 3% of cream production, on average in recent years.
“When it comes to certain high value cheeses, the supply chain in China might be able to absorb (part of) the additional tariffs,” noted Likitalo, notably traditional products protected in Europe by geographical indications, “which do well in China,” he said.
Laurens van Delft, director for trade and economics at the European Dairy Association (EDA), said: “Tariffs at this level will significantly affect the price competitiveness of EU dairy products in China. Volumes are likely to be affected, while more price-sensitive categories face greater competitive pressure.”
“Such duties increase the final import price and create uncertainty for both exporters and importers, which typically results in more cautious commercial engagement and reduced scope for new business, particularly for price-sensitive products,” he stressed.
Some market participants may already be reviewing pricing and contractual terms; while assessing alternative markets under their normal risk management, he told DII, adding, “While some redirection may be possible, different market requirements, demand profiles and competitive conditions mean that not all volumes can be easily reallocated.”
Meanwhile, the EU executive, the European Commission, is examining the preliminary determination released by Beijing that justifies the imposition of anti-subsidy duties, including against compliance with WTO rules, and will provide comments to the Chinese authorities, a spokesperson told DII.
Further, China continues to investigate its concerns and may impose definitive measures from 21 February 2026, said the Commission spokesperson. “The investigation is based on questionable allegations and insufficient evidence – the measures are unjustified and unwarranted.” He stressed Brussels’ “concern” with this matter.
“We are doing everything it takes to defend EU farmers and exporters, as well as the Common Agricultural Policy [CAP] against China’s abusive use of trade defence instruments,” added the same official.
For instance, in September 2024, the Commission launched a consultation request at the WTO against what it called “an emerging pattern of China initiating trade defence measures, based on questionable allegations and insufficient evidence, within a short period of time,” arguing that subsidies under the EU’s CAP and certain national and regional programmes are paid according to international rules2.
A Commission spokesperson told DII that China’s duties were based on “questionable allegations and insufficient evidence,” and that China’s measures are “unjustified and unwarranted.” He said Brussels would “assess all the information available against compliance with WTO rules,” adding “We are doing everything it takes to defend EU farmers and exporters, as well as the Common Agricultural Policy, against China’s abusive use of trade defence instruments.
Until now, there has been no development regarding this consultation3, which is the first step in WTO dispute settlement proceedings. Without a satisfactory solution, the EU could request a panel to be set up by the WTO to decide on this investigation.
The spokesperson stressed that Brussels is in talks and close cooperation with the industry and exploring any way possible to support it during the investigation, in addition to carefully identifying and assessing all possibilities to offer appropriate support to producers impacted by the Chinese decision, saying, “We have tools at our disposal to address injurious impacts on EU producers from situations of market disturbance, or threat thereof.”
One of them could be, for instance, promotion of activities in alternative markets, as Likitalo suggested.
The Amersfoort, Netherlands-based dairy company FrieslandCampina, which faces the highest rate of 42.7% or its products, told DII that “is committed to constructive interaction” with China’s commerce ministry and is currently awaiting final conclusions.
References:
1. english.mofcom.gov.cn/News/SpokesmansRemarks/art/2025/art_6890ea7fb3a14e47b7fb3043639829b1.html
2. ec.europa.eu/commission/presscorner/detail/en/ip_24_4821 and www.wto.org/english/news_e/news24_e/ds628rfc_25sep24_e.htm
Additional reporting by Liz Newmark
