On December 17th (Tuesday), a trade association representing American graphite producers submitted a petition to two federal agencies, calling for an investigation into whether Chinese companies have violated anti-dumping laws. These producers are seeking a punitive tariff of 920% on graphite produced in China.
The American Active Anode Material Producers petitioned the Department of Commerce to investigate whether Chinese companies have been selling battery-grade graphite at prices below fair market value, thus violating anti-dumping laws.
The group also urged the International Trade Commission to rule that China’s industrial policies encourage overproduction of graphite, along with providing substantial subsidies that artificially drive down prices, causing significant harm to the North American graphite industry.
Spokesperson for the group, Erik Olson, stated, “The industry is at risk of being suffocated by China’s malicious trade practices. If we want this industry to thrive, if we want it to exist in North America, we need to protect it.”
According to data from the U.S. Geological Survey, the U.S. currently does not produce any natural graphite and has been advocating for more investments in mining and synthetic graphite production to reduce dependence on China.
Olson expressed, “Without putting up some roadblocks along the way with China, this industry will never exist here.”
The decision on imposing tariffs will be made after the investigation concludes, with the results expected by mid-2025, after Trump took office.
However, imposing punitive tariffs on Chinese graphite could significantly increase production costs for American manufacturers of electric vehicles. Analysts mention that graphite currently represents about 10% of the manufacturing cost of electric vehicle batteries. Without alternative suppliers, a 900% increase in graphite costs could double overall expenses.
According to data from the International Energy Agency, the cost of battery production in the U.S. is at least 20% higher than in China.
Furthermore, the new administration may reduce government subsidies for electric vehicles, further elevating costs for American manufacturers.
Punitive tariffs and substantially raising tariffs on Chinese graphite will have a direct impact on major U.S. electric vehicle manufacturer Tesla, whose CEO Elon Musk is a key ally of Trump.
In 2018, during Trump’s first term, a 25% tariff was imposed on synthetic graphite from China.
At that time, Tesla was granted an exemption from tariffs on Chinese graphite, asserting that denying its request would “put Tesla at a competitive disadvantage” and approval would enable continued investment and expansion of its “Gigafactory” in Nevada.
In February of this year, Tesla reapplied for an exemption from tariffs on synthetic graphite, citing the inability to find alternatives to Chinese graphite and the need for it until the end of 2025.
Two other companies, Korean battery maker LG and SK Battery America in Georgia, also stated difficulties in finding reliable graphite sources outside of China.
However, in June this year, the Biden administration rejected extending the exemption when it expired, requiring a continued 25% tariff on imported graphite from China.
Tesla’s supplier Panasonic announced in February an agreement with Novonix to purchase synthetic graphite from its existing factory in Tennessee, with deliveries expected to begin in 2025. Novonix, an Australian-listed company, owns a graphite production plant in Tennessee and plans for expansion.
Graphite is used in manufacturing batteries’ anodes and widely applied in military hardware and steel production fields due to its hardness and heat resistance.
In 2023, the U.S. imported over 91,000 tons of graphite, valued at about $290 million, with nearly 70,000 tons coming from China, accounting for approximately 77% of total imports.
A study commissioned by the North American Graphite Alliance from the Oxford Economics Research Institute revealed that in 2023, China held a 92% share in the high-quality graphite market required for battery production.
China has started to use graphite exports as an economic weapon. In early December, China announced new export restrictions on critical minerals including graphite in retaliation for the expanded U.S. export restrictions on high-end semiconductors.
(Adapted from reports by Bloomberg)