EU cheese on the chopping block

On Wednesday, China's commerce ministry (MofCom) launched an anti-subsidy investigation into a targeted list of EU dairy products.

The details: MofCom will investigate whether 13 country-specific and seven EU-wide dairy subsidy schemes have unfairly distorted trade.

• The probe targets fresh and processed cheeses and unsweetened, un-concentrated milk and cream products with a fat content of 10% or higher.
• France, Italy, Denmark, and the Netherlands are the largest exporters of these product categories (Politico).

This probe is hardly a surprise: State media hinted in May that EU dairy could be a target for an anti-subsidy investigation.

Our take: The probe is part of a growing tit-for-tat trade spate between Beijing and Brussels.

• The EU has launched a series of investigations into Chinese companies, industries, and procurement processes.
• Meanwhile, this is China's third major trade probe into the EU's agri-food industry this year, following anti-dumping investigations into EU brandy and pork. The investigation was also announced less than a day after the EU released a key update in its anti-subsidy probe into Chinese-manufactured electric vehicles (Reuters).

The upshot: If MofCom finds a pattern of subsidy-induced dairy market distortions, it could launch investigations into other dairy products, with much wider impacts.

Get smart: Beijing doesn't want to spark a trade war with the EU – it's still avoiding targets that could spark industry-wide upheaval.

• But that may change if the EU finalizes its decision to put punitive tariffs on Chinese NEVs.