North American Graphite Mining Companies Urge U.S. Government to Impose Tariffs on Chinese Electric Vehicle Materials

North American graphite miners are lobbying the U.S. government to impose a 25% tariff on three types of graphite products from China, a key component in manufacturing electric vehicle batteries. This move is aimed at countering China’s monopoly over critical materials for automotive batteries.

If successful, this tariff imposition could lead to a confrontation between miners and their main customers – Original Equipment Manufacturers (OEMs), and further intensify the tensions between the U.S. and China. The Chinese government controls a significant portion of the key metals used in electric vehicles and other automobiles.

The U.S. government is set to decide in May whether to include graphite in the list of mineral products subject to Section 301 tariffs.

Former U.S. President Trump introduced Section 301 tariffs during his tenure to combat unfair practices such as forced technology transfers and intellectual property theft by China. Many other components used in electric vehicles are already subject to additional tariffs. However, graphite had been exempt due to China’s 70% share in its production.

China has labeled the U.S. tariffs under Section 301 as “discriminatory”.

Section 301 allows the U.S. President to impose sanctions on countries that violate trade agreements or respond to unfair, unreasonable, or discriminatory trade practices. Executives of U.S. companies have previously complained about facing pressure or being forced to share critical technology by China as a condition to access the Chinese market.

The main customers of graphite miners, Original Equipment Manufacturers (OEMs), are lobbying against the tariff hike, arguing that without a reliable supply chain from North America, they would have to rely on Chinese graphite, putting them at a disadvantage in competition with Chinese automakers.

The U.S. Trade Representative responsible for tariff collections did not respond to Reuters’ inquiries regarding the inclusion of Chinese graphite in the Section 301 list.

Graphite manufacturers rely on purchasing agreements with automakers as the basis for raising funds from lenders, but if OEMs can obtain cheaper graphite from China, they may not need to sign these purchasing agreements.

According to Reuters, allowing graphite to flow freely from China to North America would jeopardize their fundraising opportunities, as automakers could bypass future purchasing agreements by sourcing graphite cheaply from China.

The CEO of Montreal-based Northern Graphite, Hugues Jacquemin, said: “If we can’t secure project financing…we won’t be able to establish a North American supply chain.”

Minerals such as lithium and graphite are crucial for energy transition. As Western countries seek to reduce their reliance on these metals and materials from China, these minerals have become a focal point. Benchmark Mineral Intelligence estimates that by 2025, synthetic graphite may comprise nearly two-thirds of the anode market for electric vehicle batteries.

Last October, China imposed controls on graphite exports citing reasons of “better safeguarding national security and interests”.

According to customs data, Japan, the U.S., India, and South Korea are the largest buyers of Chinese graphite.

The North American Graphite Alliance, composed of Canadian and American graphite producers, spokesperson Erik Olson said: “Trade protection measures must be put in place to mitigate the impact of excessive graphite production by China and effectively manage the global market.”