Danish Dairy Giant Arla Foods Faces Mid-Range Chinese Tariff Penalties

China 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 is widely seen as retaliation for EU electric vehicle tariffs.
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.
About 60 companies, including Arla Foods, the owner of brands such as Lurpak and Castello, will pay tariffs between 28.6% and 29.7%. Italy’s Sterilgarda Alimenti will pay the lowest rate of 21.9%, while FrieslandCampina Belgium and FrieslandCampina Nederland will pay the highest rate of 42.7%. Companies that did not participate in the investigation will pay the highest rate.
Chinese dairy producers stand to benefit as they struggle with surplus production and declining profitability. Falling birthrates and budget-conscious consumers have reduced demand. Last year, China imported $589 million in affected dairy products. The government has urged domestic producers to scale back output and reduce the number of older, less productive cattle.