China is investigating whether to raise tariffs on European large-engine vehicles and will start collecting levies on brandy, escalating a trade spat after the European Union decided to impose tariffs on Chinese electric vehicles.

In this grape-growing region of western France, where brandy producers are fretting over the fallout from a trade dispute between the European Union and China, a gloom hangs over Cognac, a small town that has given its name to France's most famous brandy.

China imposed temporary anti-dumping measures on brandy imports from the European Union on Tuesday, hitting brands from Hennessy to Remy Martin, after the 27-state bloc voted for tariffs on Chinese-made electric vehicles (EVs).

China places a tax on European brandy imports in a move critics say is retaliation for recent tariffs on electric cars.

In the EU's decision to impose tariffs on China-made EVs, the bloc set tariff rates on top of the 10% car import duty ranging from 7.8% for Tesla to 35.3% for SAIC and other producers deemed not to have cooperated with its investigation.

The move came days after the European Union pressed ahead in adopting definitive tariffs of up to 45% on China-made battery electric vehicles last Friday.

European luxury shares have slid on investor concerns that Hermes handbags and Dior slingbacks may be Beijing's next targets for retaliation, following the EU's decision to slap tariffs on China EVs,

China says its anti-dumping penalties against brandy imported from the EU are legitimate trade remedy measures. Hennesy and other brands, mostly from France, will face extra import tax from Friday. The EU says it will challenge the measures at the World Trade Organisation.

China said Wednesday its latest anti-dumping measures targeting brandies imported from the European Union were "legitimate trade remedy measures" amid increasing trade tensions with Brussels, following a temporary restriction on imports of several EU brandy brands,