US Commerce Department imposes a 93.5% tariff on anode active materials imported from China

The U.S. Commerce Department has imposed a preliminary 93.5% anti-dumping tariff on Chinese anode-grade graphite imports, a vital ingredient used to make electric vehicle batteries. However, the tariff does not come into effect until December 5, 2025. 

After news of the tariff went live on Friday, shares of non-Chinese graphite producers rallied. Australia-listed Syrah Resources, the largest non-Chinese graphite miner, witnessed a 22% increase, while Canada’s Nouveau Monde Graphite jumped 26% as investors believe the duties could give them an edge in the competition against dominant Chinese rivals.

Novonix, a dual-listed Australian-US producer, also gained 15%, and South Korea’s Posco Future M jumped 20%.

The anti-dumping tariff hailed as a positive development for the sector

The department’s action comes in response to investigations prompted by the American Active Anode Material Producers, who alleged market disruption caused by Chinese graphite being sold at unfairly low prices due to state subsidies. Combined with existing tariffs, the effective rate could reach 160%.

Ben Lyons, director of equity research at the investment bank Jarden, called the duties a “positive development” for the sector. He believes the US government’s moves on graphite and rare earths have demonstrated a strategic intent to patronize more non-Chinese sources.

“It’s a very strong signal that they are intent on fostering an ex-China supply chain,” Lyons said.

The move follows Beijing finalizing new restrictions this week on the export of technologies crucial for making cutting-edge lithium iron phosphate batteries.

Anodes are very difficult for the West to produce. Also, low prices and the near-complete dominance of Chinese groups in the global supply chain make it hard to reduce dependence on China.

Tim Bush, a Hong Kong-based battery analyst at UBS, has noted that efforts in Asia and North America to build a non-Chinese anode supply chain had been “undermined by the unwillingness of US automakers to underwrite the costs.”

The statement partially reflects the skepticism that is growing among battery and electric vehicle producers about the ability of North American producers to supply the battery-grade graphite they require.

Some large American companies have opposed the tariffs

While some have heralded the duties as a positive development, companies like Tesla and Panasonic are opposed to them.

In a submission to the US government earlier this year, Tesla claimed US graphite producers were yet to show they have the “technical ability to produce commercial quantities” of the mineral at the quality and purity required by Tesla and other battery cell manufacturers.”

The stance EV manufacturers in the US have taken is not surprising. Additional import costs on Asian battery providers, some of which are responsible for serving American EV manufacturers such as Tesla, General Motors, and Ford, will lead to extra costs being passed on to US consumers.

Since an average EV battery contains 50 to 100 kilograms of graphite, the new tariffs could deprive battery and EV makers of up to 20% of the value of generous federal production credits introduced by the Biden administration.

Michael O’Kronley, chief executive of Novonix, said in a statement that the US move “underscores the strategic importance of building a domestic supply chain for critical minerals” in North America, such as synthetic graphite.

In 2024, the US Energy Department loaned the Australian company over $750 million to construct the largest synthetic graphite factory in North America, based in Chattanooga, after China put new restrictions on exports.

However, despite the new tariffs, Matthieu Bos, chief executive of Falcon Energy Materials, is convinced Western graphite producers will still struggle to produce at scale, with low costs and high quality, if they continue without leaning on China’s technical expertise.

“Everyone is popping the champagne as share prices are up, but we’ve been here before,” he said. “It’s always easier to mine the capital markets than build something.”

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