U.S. Tariffs on Chinese Graphite Raise EV Battery Costs, May Boost Domestic Investment

The US Commerce Department has imposed a 93.5% tariff on graphite imports from China, a crucial material for electric vehicle batteries. Graphite can make up nearly a third of a lithium ion battery's weight, and the tariff could significantly increase costs for EV battery makers. China is a major producer of graphite, and automakers and battery makers have relied on imports from China for high-quality graphite. The effective tariff rate on Chinese graphite imports now stands at 160%. This could spur domestic investment in graphite production.

The U.S. Commerce Department has imposed a 93.5% tariff on graphite imports from China, a crucial material for electric vehicle (EV) batteries. Graphite can make up nearly a third of a lithium ion battery's weight, and the tariff could significantly increase costs for EV battery makers [1]. China is a major producer of graphite, and automakers and battery makers have relied on imports from China for high-quality graphite [3].

The effective tariff rate on Chinese graphite imports now stands at 160%, which could lead to a significant increase in the cost of EV batteries. This tariff follows a Commerce Department ruling that China unfairly subsidizes graphite and that Chinese suppliers were dumping their products in the U.S. at artificially low prices [3]. The tariff comes as EV affordability and demand concerns in the U.S. are rising, with the announcement of the end of a $7,500 federal EV tax credit in September [1].

The tariff could also spur domestic investment in graphite production. The American Active Anode Material Producers trade group, which represents U.S. graphite producers, has been advocating for investigations into whether Chinese companies were violating antidumping laws [3]. Companies like Tesla and Panasonic, which rely on Chinese graphite imports, have been pushing to block the new tariff, arguing that the domestic industry hasn't developed enough to meet their quality standards and volume requirements [3].

The nascent North American graphite supply chain could benefit from the tariff. Benchmark Mineral Intelligence expects tariff costs to increase the price of Chinese active anode material to $9,300 per tonne, compared with $3,700 under previous tariff rates. U.S.-made anode materials cost around $5,400 per tonne [3]. However, the domestic graphite industry is still in its infancy, and companies could be forced to absorb higher costs for Chinese graphite because there is not enough commercial-scale production in the U.S. today [3].

References:
[1] https://www.autonews.com/manufacturing/an-trump-tariffs-graphite-china-0728/
[2] https://gvwire.com/2025/07/29/trump-eyes-aug-1-trade-deals-as-eu-china-talks-continue-us-commerce-chief-says/
[3] https://finance.yahoo.com/news/u-tariff-chinese-graphite-raises-100000671.html