United States Targets Chinese Graphite With 93.5% Tariff Hike

The US Department of Commerce has imposed preliminary anti-dumping duties of 93.5% on graphite imports from China, a key material used in electric vehicle batteries, following findings that Chinese producers had received unfair government subsidies.

The move stems from a petition filed in December by a US graphite industry trade group, the American Active Anode Material Producers, requesting federal investigations into alleged violations of anti-dumping regulations. Combined with existing tariffs, the total effective duty will rise to 160%, the group said.

This decision is expected to escalate tensions in the global EV supply chain, which is already under strain from China's export restrictions on certain critical minerals and battery technologies. According to Sam Adham, Head of Battery Materials, CRU Group, the new tariff could raise battery costs by around US$7/kWh, roughly 20% of the battery manufacturing tax credit under the US Inflation Reduction Act. For some Korean battery producers, this could eliminate profits for up to two quarters, he added.

Major EV players such as Tesla and its battery partner Panasonic had lobbied against the tariffs, citing the lack of sufficient domestic production capable of meeting their quality and volume needs. Following the announcement, Tesla’s stock dropped by as much as 1.4% on July 17.

The United States imported nearly 180,000mt of graphite in 2023, with about two-thirds sourced from China. China currently dominates the global graphite processing market. In a recent report, the International Energy Agency identified graphite as highly vulnerable to supply disruptions and called for urgent diversification efforts. The IEA expects graphite to remain the dominant anode material in lithium-ion batteries through the medium term, with silicon gradually gaining ground after 2030.

The Commerce Department’s preliminary ruling was released in July 17, with a final decision anticipated by Dec. 5.