The European Union faces retaliation from China over brandy duties after the vote on EV tariffs.

• Starting from this Friday, companies selling brandy from the bloc will have to pay security deposits to Chinese customs officials.
• The Chinese brandy industry has been significantly harmed or endangered, according to a statement from the Ministry of Commerce.
• The European Union adopted tariffs of up to 45% on China-made battery electric vehicles days after the move.

The Ministry of Commerce in China announced that it will begin imposing provisional anti-dumping measures on brandy products imported from the European Union this week, following the EU's decision to impose tariffs on Chinese-made electric vehicles.

Starting from this Friday, companies selling brandy from the bloc will be required to pay a security deposit to Chinese customs officials. The deposit amount will be between 30.6% and 39% of the total value, as stated in the notice.

In late August, China reversed its preliminary ruling and decided to impose anti-dumping measures on European distillers, despite concluding that they had been selling brandy in China at a 30.6% to 39% margin.

The Chinese brandy industry has been significantly harmed or endangered.

The European Union voted on Friday to adopt definitive tariffs of up to 45% on China-made electric vehicles, with an additional tariff of up to 35% on top of the existing 10% rate.

The Chinese Ministry of Commerce has condemned the EU's imposition of anti-subsidy duties on Chinese electric vehicles as a protectionist act that is "unfair, non-compliant and unreasonable," according to a statement issued on Friday.

In January, the European Union's brandy imports were subject to an anti-dumping investigation by China.

European impact

Amid a decline in Chinese imports of cognac and brandy, with August sales decreasing by 40% compared to the previous year, UBS' "spirit tracker" reports that measures have been taken.

The European Commission announced its intention to challenge Beijing's provisional imposition of measures at the World Trade Organization.

The European Commission's Olof Gill, spokesperson for trade and agriculture, stated in an emailed statement that we believe the measures are unfounded and we are committed to protecting EU industry from the misuse of trade defence instruments.

According to Reuters, French Trade Minister Sophie Primas stated that Beijing's Tuesday announcement appears to be a retaliatory measure in response to the EU Commission's investigation into electric vehicles.

She stated that a retaliatory measure of that kind would be unacceptable and in conflict with international trade rules. Furthermore, she pointed out that France will join the European Union in protesting against the Chinese decision.

The latest measure from Beijing affected the stock of European spirit-makers, with Pernod Ricard down 3.69%, Remy Cointreau down 8.34%, and LVMH, a luxury conglomerate that produces high-end cognac through its Moet Hennessy brand, down 3.57% at 11:58 a.m. London time.

— CNBC's Ganesh Rao contributed to this report.