Investigation into EU dairy products' subsidies deepens as China prolongs anti-subsidy scrutiny

China and the European Union (EU) have been locked in a series of trade disputes over the past year, with the latest developments revolving around electric vehicles (EVs) and dairy imports.

The conflict began in October 2023, when the EU imposed extra import taxes of up to 35 percent on Chinese EVs. In response, China initiated an anti-subsidy investigation into the EU's EV imports in August 2024. This investigation was extended in July 2025, citing the complexity of the case, and will continue until February 21, 2026.

The EU argues that Beijing's subsidies for its EV manufacturers help them undercut European competitors, potentially overwhelming European markets. However, China has denied these claims and has announced retaliatory probes into imported European pork, brandy, and dairy products.

China's probe into EU dairy products was extended due to the complexity of the case, and it covers imports of some cheese, milk, and cream. Interestingly, China imposed duties on EU brandy in July 2023, but these duties were imposed selectively, exempting major producers if they stuck to a minimum price.

The two sides are currently in discussions to set minimum prices for Chinese EVs, but no agreement has been reached as yet. European Council President Antonio Costa expressed the bloc's desire for "concrete progress on issues related to trade and the economy" during an EU-China summit in Beijing in June.

Despite these ongoing disputes, deep divisions remain over trade between the EU and China. The EU fears that subsidised Chinese goods could overwhelm European markets, while China denies providing unfair subsidies and sees the EU's actions as protectionist.

As both sides continue to negotiate, the future of their trade relations remains uncertain. The extended investigation into EU dairy imports and the ongoing dispute over EVs will undoubtedly shape the trajectory of EU-China trade in the coming months.