China appears to be developing a limited and targeted retaliation against Europe after the bloc unveiled expanded tariffs on Chinese electric vehicles last week. A tit-for-tat retaliation between Brussels and Beijing risks triggering another trade war. 

On Monday, the Chinese Ministry of Commerce launched an anti-dumping probe on pork imports from the European Union. 

According to Bloomberg, this “will be viewed as Beijing’s counter to similar investigations being conducted by the EU, which is looking at Chinese subsidies across a range of industries and will impose tariffs on electric car imports from July.” 

Europe’s pork exports to China amounted to $1.83 billion last year, with farmers in Spain, Denmark, and the Netherlands benefiting the most. In the grand scheme, pork exports to China are only a fraction of a percent of overall trade between the bloc and China. Last year, China imported $282 billion worth of goods from the bloc. 

Source: Reuters

EU farmers are on high alert as Beijing’s probe on pork imports could potentially expand to other food products. These investigations, whether anti-dumping or anti-subsidy, could have a significant impact. There’s a looming threat that the EU’s luxury products sector, home to top brands such as LVMH, Gucci, and Prada, could also be targeted.

While the situation is troubling for the EU, there could be a silver lining for hog farmers in the US, Canada, and Brazil.

“If China responds in kind with aggressive tariffs, they risk triggering a trade war,” Joe Peissel, an economic analyst at research firm Trivium China, said, adding, “Beijing is desperate” to avoid that. 

Both the EU and China may engage bilaterally to resolve trade disputes. If not, and negotiations break down this summer, then expect a tit-for-tat trade war.