Trading Up: How China-EU Tariffs Are Shaping Opportunities in Spirits and EVs

The trade war between China and the EU over anti-dumping duties on EU brandy and EV tariffs isn't just a geopolitical headache—it's a catalyst for investment opportunities in two distinct sectors: premium spirits and EV supply chains. With deadlines looming and negotiations fraught with tension, here's how investors can profit from the chaos.

The Brandy Crisis: A Shift to New Markets

China's anti-dumping duties on French Cognac—up to 39%—have slashed exports by 70% since late 2024. Major producers like Rémy Cointreau (RMC.PA) and Pernod Ricard (PDR.PA) have seen shares plummet, with losses projected to double by July 2025 if tariffs remain. But this isn't all doom and gloom.

The Opportunity:
The collapse in China opens doors to other markets. The U.S., Middle East, and emerging economies in Asia-Pacific (e.g., India, Southeast Asia) are ripe for premium spirit growth. These regions are seeing rising disposable incomes and a growing appetite for luxury goods.

• Target Markets:
• U.S.: Already a $1.5B market for Cognac, but untapped potential exists in craft cocktail culture and aging demographics.
• Middle East: Rising wealth and a cultural shift toward Western luxury goods.
• Asia-Pacific: Countries like India and Indonesia, where a young, affluent middle class is expanding.

Investment Play:
Look to spirits companies pivoting to these markets. Rémy Cointreau, despite its China pain, has a strong brand portfolio (e.g., Courvoisier) and could outperform if it successfully redirects distribution. Smaller players with niche brands or exposure to emerging markets (e.g., William Grant & Sons in the U.S.) are also worth watching.

EV Supply Chains: Localization, Lithium, and Liabilities

The EU's 35-45% tariffs on Chinese EVs and China's retaliatory duties on EU goods have forced both sides to rethink supply chains. The proposed compromise—a minimum import price (MIP) framework—could stabilize trade, but the broader shift is already underway: localization.

• Key Trends:
• EU Production Hubs: German automakers (e.g., BMW, Mercedes) are accelerating local EV manufacturing to avoid tariffs. This boosts demand for suppliers like thyssenkrupp (Germany's industrial machinery giant) and Bosch (battery tech).
• Battery Minerals Rush: Lithium and nickel are critical. Firms with reserves in EU-friendly regions (e.g., SQM in Chile, Vale in Brazil) or recycling partnerships (e.g., Redwood Materials) will thrive.
• Charging Infrastructure: The EU needs a 9x increase in public chargers by 2030. Firms like IONITY (a joint venture with BMW, VW, etc.) and ChargePoint are positioned for growth.

The Risks:
- Costs: EU production is 30-40% costlier than in China. Margins will be squeezed unless tariffs stay high.
- Geopolitical Whiplash: If talks fail, tariffs could spiral, hurting Chinese EV exports and EU automakers reliant on Chinese batteries.

Investment Play:
- Battery Minerals: Buy into lithium plays like SQM (SQM) or Albemarle (ALB).
- Localization Plays: EU-based suppliers (e.g., thyssenkrupp, Bosch) benefit from reshoring.
- EV Infrastructure: ChargePoint (NASDAQ: CHPT) or EVgo (NASDAQ: EVGO) for charging networks.

The Bottom Line: Trade Tensions = Market Opportunities

The China-EU trade war isn't just a threat—it's a reshuffling of global markets. Investors who bet on market diversification in spirits and supply chain resilience in EVs can profit from the upheaval.

• Spirit Market:
• Buy Rémy Cointreau (RMC.PA) if it pivots effectively.

• Watch emerging market-focused distillers.

• EV Supply Chains:

• Lithium miners and EU suppliers are safer bets than pure-play Chinese EV stocks.
• Avoid overexposure to BYD (002594.SZ) until tariff talks resolve.

The July 5 deadline looms. Stay nimble—these tensions could shift overnight, but the long-term trends toward localization and diversification are here to stay.

Data as of June 19, 2025. Past performance does not guarantee future results.