North American graphite producers have formally called on the US government to impose tariffs of up to 920% on Chinese suppliers of key battery materials, citing Beijing’s unfair trade practices. This bold initiative, led by the American Active Anode Material Producers (AAAMP), aims to combat China’s overwhelming control of the global graphite market and protect the burgeoning domestic industry in the United States and Canada.
The petition, submitted to the US Department of Commerce and the US International Trade Commission (ITC), claims that China exports natural and synthetic graphite at artificially low prices, undercutting its North American competitors. These practices, the group claims, are made possible by labor and environmental standards in China that allow its producers to rapidly increase production and dominate the market.
Chinese domination of graphite
Graphite, which is the largest component by volume in an electric vehicle (EV) battery, can be processed from natural sources or manufactured synthetically. China is the world leader in the production of both types and currently holds more than 95% of the global market share for battery-grade graphite.
Earlier this month, China further tightened graphite export controls, limiting supplies to the United States and escalating trade tensions. These restrictions have prompted Western countries to accelerate efforts to diversify their supply chains and reduce their dependence on Beijing for minerals critical to the clean energy transition.
Tariffs as a defense mechanism
The United States currently imposes a 25% tariff on most Chinese graphite, but AAMP says this rate is insufficient to thwart “malicious trade practices” by Chinese suppliers. The group says current tariffs can be easily absorbed by Chinese competitors, making them ineffective in protecting North American producers.
The proposed 920% tariff, if adopted, would significantly increase the cost of Chinese graphite imports and create an opportunity for domestic producers to compete. However, the petition has not yet received an official response from the Commerce Department or the ITC.
A broader strategy against Chinese imports
The call for high tariffs comes amid increased scrutiny of China’s dominance in the global critical minerals sector. President-elect Donald Trump has expressed willingness to impose broad tariffs on Chinese goods, and his advisers have advocated measures targeting foreign critical minerals, including those linked to Beijing.
Not all U.S. critical minerals companies agree with blanket tariffs. For example, Jervois Global (ASX: JRV), which recently closed the only US cobalt mine before it became operational due to competition from Chinese producers, has proposed an alternative solution. The company suggests requiring manufacturers to source materials from Western suppliers rather than imposing universal tariffs.
Implications for the global market
If the United States adopts the proposed tariff, it could reshape the global graphite market. Higher import costs for Chinese graphite would encourage domestic and allied producers to increase production, which could spur investment in North America’s critical minerals industry.
Companies like NOVONIX Limited (NASDAQ: NVX, ASX: NVX) are already working to strengthen North American supply chains. NOVONIX, a leading producer of synthetic graphite, recently received a $755 million loan from the U.S. Department of Energy to construct a large-scale synthetic graphite production facility in Chattanooga, Tennessee. This facility is expected to begin operations in 2025 and reduce the region’s dependence on Chinese imports.
Additionally, new investments in natural graphite mining and processing could pave the United States’ path to long-term energy security. However, achieving this goal will require significant government support, streamlined permitting processes, and technological advancements to rival China’s economies of scale.
Australia’s role in diversifying supply chains
As the United States fights Chinese imports with tariffs and trade lawsuits, Australia has become a key ally in the supply chain for critical minerals. With vast reserves of natural graphite, rare earth elements and high purity silicon, Australia is positioned to play a central role in reducing global dependence on China.
Companies like Syrah Resources (ASX: SYR) and Lynas Rare Earths (ASX: LYC) are leading the export of critical minerals to Western markets. Syrah, for example, operates one of the world’s largest natural graphite mines in Mozambique and is expanding its processing capabilities in the United States.
As countries like the United States and Canada invest in domestic production, partnerships with Australian companies could provide an immediate solution to fill gaps in the supply chain while local facilities expand.
Looking to the future
AAAMP’s petition represents a crucial step in North America’s efforts to regain control of its supply chains for batteries for electric vehicles and other technologies. Although the 920% tariff proposal may face opposition from some sectors, it highlights the urgency of addressing China’s dominance in the graphite market.
