Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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• The U.S. Commerce Department has imposed preliminary anti-dumping tariffs of up to 160%—and over 700% for some firms—on Chinese graphite imports.
• The tariffs threaten to significantly raise battery costs.
• While EV makers like Tesla oppose the move, non-Chinese graphite producers have seen their stock surge.

Combined with existing tariffs, the 93.5% preliminary anti-dumping tariffs the U.S. Commerce Department announced this week on anode-grade graphite imported from China, targeting nearly $350 million in goods, promises to deal a major blow to battery producers. It would bring the tariffs to 160% on the notion that Chinese graphite is being sold in the U.S. below fair market value.  

And it gets worse than that for some Chinese producers. China’s Huzhou Kaijin New Energy Technology and Shanghai Shaosheng Knitted Sweat, specifically, will face even higher duties exceeding 700%. The final determinations will be announced by December 5, 2025.

The latest tariffs stem from a petition filed in December by the American Active Anode Material Producers for alleged violations of anti-dumping regulations, and the impact on the American EV battery supply chain will likely be significant. 

The United States imported ~180,000 metric tons of graphite in 2023, with two-thirds coming from China. According to a recent report by the International Energy Agency (IEA), the U.S. graphite supply chain remains highly vulnerable to supply disruptions, with the energy agency calling for urgent diversification efforts. The IEA has projected that graphite will remain the most widely used anode material in lithium-ion batteries over the next five years, with silicon expected to gradually gain ground after 2030.

Related: Brent Stuck Below $70 as Trump Faces Trade Deadline Turmoil

The latest tariffs on graphite are expected to escalate tensions between the two countries, with the U.S. EV sector already feeling the heat after Beijing imposed export restrictions on certain critical minerals and battery technologies. In December 2024, China implemented export restrictions on several critical minerals, including gallium, germanium, antimony, and graphite, primarily targeting the U.S. This action is seen as a response to increased tariffs and trade tensions with the US. The ban has significant implications for various industries globally, particularly those reliant on semiconductors, electronics, and renewable energy technologies. 

The cost implications of the tariffs will also be significant. 

According to Sam Adham, Head of Battery Materials at CRU Group, battery costs could increase by roughly $7/kWh once the tariffs take effect, effectively cutting ~20% of tax credits under the U.S. Inflation Reduction Act (IRA). “I think this is going to change behaviors and sourcing strategies of battery manufacturers in the United States,” Michael O’Kronley, chief executive officer at Novonix, told Bloomberg. “The cost of graphite imported from China is going to go up. This ruling essentially is going to accelerate some of those discussions we have with manufacturers.”

That’s the reason why major EV players such as Tesla Inc. (NASDAQ:TSLA) and Panasonic have lobbied hard against the tariffs, citing an insufficient domestic supply chain to meet their quality and volume needs. 

Back in May, analysis from the International Council on Clean Transportation projected that U.S. battery production would decline by ~75% by 2030 to 250 GWh and EV sales by 40% under the Trump administration. According to the report, Trump’s “Big Beautiful Bill”, which he signed into law earlier this month, could eliminate 130,000 potential jobs in the EV sector by 2030, the majority being in battery manufacturing. Previously, companies had announced a total of 128 U.S. facilities for battery manufacturing in the country thanks to generous credits under the 2022 IRA, with more than half yet to begin construction. 

Not surprisingly, TSLA took a hit, falling 3% after the tariffs were announced, while stocks of non-Chinese graphite producers soared: Shares of Canada’s Northern Graphite Corporation (OTCQB:NGPHF) have doubled; Australian graphite miner, Syrah Resources Ltd. (OTCPK:SYAAF), have surged nearly 40%, Novonix Ltd. (OTCPK:NVNXF), an Australian-listed graphite producer with a plant in Chattanooga, Tennessee, jumped 21%, Canada’s Nouveau Monde Graphite (NYSE:NMG) gained 23% while South Korea’s POSCO Holdings Inc. (NYSE:PKX) gained 5%. Interestingly, Northern Graphite is one of the companies that lobbied for the tariffs on Chinese graphite. Northern Graphite engages in the development and production of graphite and other minerals in Canada and Namibia.

Meanwhile, Wall Street is bullish about the U.S. graphite sector, saying the tariffs will encourage companies like Tesla to buy their graphite from U.S. producers. “The U.S. is likely to be promoting the development of its own graphite industry by forcing domestic battery makers to switch suppliers,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital, as reported by Bloomberg. “Thus upstream suppliers of Chinese graphite anodes are more likely to be impacted.”

That shift is expected to hit Chinese suppliers hard, particularly those who have long dominated the synthetic and natural graphite anode markets with low-cost exports. According to trade data, over 65% of U.S. graphite imports in 2023 originated from China, with companies like BTR New Energy, Shanghai Shanshan, and Huzhou Kaijin heavily exposed.

With anti-dumping duties pushing effective tariff rates to as high as 160% (and over 700% for certain producers) the cost advantage that underpinned Chinese market share is rapidly eroding. Analysts expect many of these upstream firms to lose access to U.S. buyers unless they shift production offshore or absorb significant margin compression. Beijing’s December 2024 export restrictions on graphite further complicate the picture, heightening uncertainty for Chinese exporters already navigating increased geopolitical and cost pressures.

By Alex Kimani for Oilprice.com

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