(Bloomberg) — The US Commerce Department imposed preliminary anti-dumping duties of 93.5% on Chinese imports of graphite, a key battery component, after concluding the materials had been unfairly subsidized.
Most Read from Bloomberg
A trade association representing US graphite producers in December filed petitions with two federal agencies, asking for investigations into whether Chinese companies were violating anti-dumping laws. The new duties will add to existing rates making the effective tariff 160%, according to the American Active Anode Material Producers, the trade group that filed the complaint.
The anti-dumping duty on graphite is set to increase tensions along the global electric-vehicle supply chain that’s already facing Beijing’s export controls of some critical minerals and battery technology. Battery supplier shares slipped while North American graphite producers soared.
“Commerce’s determination proves that China is selling AAM at less than fair value into the domestic market,” Erik Olson, a spokesperson for the anode producers trade group, said in a statement.
The tariff would be a blow to battery manufacturers, said Sam Adham, head of battery materials at consultancy 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, he said.
“That basically wipes out profits for one or two entire quarters for the Korean battery makers,” Adham said.
Tesla Inc. and its key battery supplier, Japan’s Panasonic Inc., were among companies pushing to block the new tariffs, arguing that they rely on Chinese graphite imports because the domestic industry hasn’t developed enough to meet the quality standards and volume that the carmaker requires. Tesla shares fell as much as 0.7% Thursday.
Graphite is a key raw material used to make anodes of the batteries, and nearly 180,000 metric tons of graphite products were imported into the US last year, with about two-thirds of these deliveries coming from China, according to BloombergNEF.
China dominates the processing capacity of graphite, with the International Energy Agency calling the material one of the most exposed to potential supply risks and “requiring urgent efforts for diversification,” according to a report in May.
Story continues
