U.S. Imposes 93.5% Tariff on Chinese Graphite Imports for EV Batteries

The U.S. Commerce Department has imposed a preliminary 93.5% anti-dumping tariff on Chinese anode-grade graphite imports, a crucial component used in the production of electric vehicle batteries. This tariff, however, will not take effect until December 5, 2025.

The tariff was imposed in response to investigations initiated by the American Active Anode Material Producers, who alleged that Chinese graphite was being sold at unfairly low prices due to state subsidies, thereby disrupting the market. When combined with existing tariffs, the effective rate could reach as high as 160%.

Ben Lyons, director of equity research at an investment bank, described the duties as a “positive development” for the sector. He believes that the U.S. government’s actions on graphite and rare earths demonstrate a strategic intent to support more non-Chinese sources. “It’s a very strong signal that they are intent on fostering an ex-China supply chain,” Lyons said.

This move comes after Beijing finalized new restrictions on the export of technologies crucial for making cutting-edge lithium iron phosphate batteries. Anodes are particularly challenging for the West to produce, and the near-complete dominance of Chinese groups in the global supply chain, along with low prices, makes it difficult to reduce dependence on China.

Tim Bush, a battery analyst, noted that efforts in Asia and North America to build a non-Chinese anode supply chain had been “undermined by the unwillingness of U.S. automakers to underwrite the costs.” This reflects growing skepticism among battery and electric vehicle producers about the ability of North American producers to supply the required battery-grade graphite.

While some view the duties as a positive development, major companies like Tesla and Panasonic have opposed them. Tesla, in a submission to the U.S. government, claimed that U.S. graphite producers have yet to demonstrate the “technical ability to produce commercial quantities” of the mineral at the quality and purity required by Tesla and other battery cell manufacturers.

The stance of U.S. EV manufacturers is understandable, as additional import costs on Asian battery providers, which serve American EV manufacturers, will lead to extra costs being passed on to U.S. consumers. Since an average EV battery contains 50 to 100 kilograms of graphite, the new tariffs could deprive battery and EV makers of up to 20% of the value of generous federal production credits introduced by the Biden administration.

Michael O’Kronley, chief executive of Novonix, stated that the U.S. move “underscores the strategic importance of building a domestic supply chain for critical minerals” in North America, such as synthetic graphite. In 2024, the U.S. Energy Department loaned the Australian company over $750 million to construct the largest synthetic graphite factory in North America, based in Chattanooga, after China put new restrictions on exports.

However, despite the new tariffs, Matthieu Bos, chief executive of Falcon Energy Materials, is convinced that Western graphite producers will still struggle to produce at scale, with low costs and high quality, if they continue without leaning on China’s technical expertise. “Everyone is popping the champagne as share prices are up, but we’ve been here before,” he said. “It’s always easier to mine the capital markets than build something.”