The US Commerce Department on Thursday imposed preliminary anti-dumping duties of 93.5% on Chinese graphite imports, a critical component in electric vehicle (EV) batteries, after determining that Chinese materials were being unfairly subsidized.
This new duty brings the effective tariff to 160%, according to the American Active Anode Material Producers, the trade association that filed the original petition in December. The move is set to escalate tensions in the already strained global EV battery supply chain, especially in light of China’s recent export controls on key minerals and battery technologies.
“Commerce’s determination proves that China is selling AAM at less than fair value into the domestic market,” said Erik Olson, a spokesperson for the trade group.
The tariffs follow a petition by U.S. graphite producers who alleged that Chinese firms were violating anti-dumping laws. Graphite is a key material used to produce anodes in lithium-ion batteries. In 2023, the U.S. imported about 180,000 metric tons of graphite, two-thirds of which came from China, according to BloombergNEF.
The new duties are already having market impact. Shares of U.S. graphite producers soared, while battery suppliers dipped. Westwater Resources Inc., which is building a graphite plant in Alabama, surged 15%, with its chief commercial officer Jon Jacobs stating:
“The tariff ruling provides the policy clarity and market signals needed to accelerate domestic graphite production.”
Westwater aims to increase annual production capacity from 12,500 metric tons to 50,000 metric tons by 2028. Canadian firms like Nouveau Monde Graphite Inc. and Northern Graphite Corp. also saw sharp gains.
However, the tariff is likely to raise battery production costs. According to Sam Adham, head of battery materials at CRU Group:
“A 160% tariff equates to $7 per kilowatt-hour added cost to an average EV battery cell, or one fifth of the battery manufacturing tax credits that originated in the Inflation Reduction Act and survived President Trump’s budget bill.”
“That basically wipes out profits for one or two entire quarters for the Korean battery makers,” he added.
Major players like Tesla Inc. and Japan’s Panasonic Inc. have been lobbying against the tariffs, arguing that U.S. graphite suppliers cannot yet meet the quality and quantity needs of EV production. Tesla shares dipped 0.7% following the announcement.
Graphite remains the dominant material for EV anodes, and according to the International Energy Agency (IEA), it is among the materials most vulnerable to global supply risks. The IEA report stressed the urgent need for diversification, with silicon expected to begin competing with graphite only after 2030.
Analysts at Roth Capital Partners warned the tariff could alter cost structures for battery storage firms like Fluence Energy Inc. and Enphase Energy Inc., whose shares declined 0.4% and 0.7%, respectively.
While the Inflation Reduction Act preserved energy storage tax credits, Treasury Department rules limiting the use of Chinese battery cells have added complexity. Experts at Wood Mackenzie say this will slow the pace of energy storage growth on the U.S. grid due to rising costs and supply chain constraints.
The Commerce Department is expected to announce a final determination on the graphite anti-dumping tariff by December 5.