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This comes even although some producers have welcomed the exemptions granted to imports of critical equipment, Fastmarkets’ review of public comments has found.
A review of actions taken under the Section 301 “Investigation of China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property, and Innovation” was published in May 2024. The review proposed that new tariff rates be imposed on a variety of raw materials and fabricated products.
The US Trade Representative (USTR) has delayed its final determination on tariff rates, which was initially expected by the start of August. Instead, it said, it was continuing to review public comments on the proposed modifications.
Under the review, the USTR proposed a 25% tariff on Chinese natural graphite, to be introduced from 2026, while also proposing a 25% tariff on lithium-ion batteries from China, starting this year.
It also proposed the compilation of a list of machinery used in domestic US manufacturing, with importers of the specified products to be eligible to request a temporary exemption from standing import tariffs.
The comments received have shown that graphite consumers are lobbying for a reduction in the proposed tariffs, while producers are advocating for the support that tariffs could offer.
China currently produces the vast majority of the world’s natural and artificial graphite. But investment in supply chains outside of the East Asian country has been boosted by geopolitical tensions, by China’s export controls on such materials, and by US legislative incentives for domestic production – notably those arising from the country’s Inflation Reduction Act (IRA).
Automotive manufacturer Ford called for a reduction in tariffs on certain types of artificial and natural graphite needed for the lithium-ion batteries used in electric vehicles (EVs), for which the US does not yet have sufficient production to meet domestic demand.
“Given the low levels of domestic sources for the type of graphite needed to produce anodes for lithium-ion EV batteries, we recommend reducing the tariff on certain artificial and natural graphite [materials] that were the subject of recently expired exclusions,” Christopher Smith, Ford’s chief government affairs officer, wrote.
Another automotive manufacturer, Daimler Truck North America, criticized the proposed increase in tariffs on lithium-ion batteries for EVs, urging the USTR “not to pursue the proposed tariff increases on these key parts and materials, or to at least delay the increases until the domestic EV industry is better able to source those materials domestically.”
On the other hand, ex-China graphite producers Syrah Resources and South Star Battery Metals supported the tariffs broadly, calling for them to be applied more quickly.
Syrah’s chief financial officer, Stephen Wells, wrote that 100% tariffs should be applied to natural graphite imports with immediate effect, “to ensure that US producers can remain competitive with Chinese importers and contribute to US energy and supply chain security.”
He continued: “The proposed 25% tariff in 2026 for products in this tariff code is too little, too late, to support continued supply from existing US producers and new capacity developments in the US in this critical part of the EV supply chain.”
Syrah began commercial production in February this year of graphite anode at its 11,250 tonnes per year Vidalia facility, in the US state of Louisiana, touting itself as the first commercial-scale, vertically integrated graphite anode producer outside of China.
“The two-year delay in implementation significantly hampers efforts to protect US-based graphite producers from predatory Chinese actions,” South Star Battery Metals president and chief executive officer Richard Pearce wrote. “It is also a missed opportunity to drive private capital investments in non-Chinese graphite production.”
South Star has a graphite mine in Brazil and the BamaStar graphite project in the US state of Alabama.
In May, the USTR also announced that, from June 14, it would end the exemption on existing tariffs covering Chinese graphite anodes.
The tariffs on graphite anodes were launched in 2018 during the administration of former US President Donald Trump, using a Section 301 tariff. But due to China’s dominant role in anode supply chain, the 25% tariff has been waived in recent years.
This exclusion was controversial in the US graphite sector, with industry association North American Graphite Alliance (NAGA) calling in February for an end to the exemption on imports of artificial graphite from China.
“For national security and economic reasons, it is imperative that there is a robust supply of graphite available in North America,” the alliance wrote in its comments on an earlier consultation. “Without trade protections, China will continue to dominate the industry.”
There was also general agreement on the USTR’s proposal to establish an exclusion process that would apply to imports of machinery useful for domestic industry, temporarily exempting them from tariffs.
Syrah Resources and eVAC Magnetics both advocated for exemption for imports of Chinese machinery under the Section 301 tariffs, highlighting their importance for domestic US production of key battery materials and components.
The USTR’s 2018 $34 Billion Trade Action (List 1) included a 25% tariff on imports of machinery and equipment from China, used in many cases for the production of critical materials and downstream products, including rare earth magnets and anode materials.
Syrah Resources said that tariffs on Chinese equipment effectively functioned as a “tax” on US manufacturers, obstructing the development of a domestic supply chain for natural graphite, an essential mineral for EV batteries.
“Specialized equipment is vital to producing active anode material [AAM] to the specification required by customers, and therefore to Syrah expanding its domestic commercial AAM operation for the US battery supply chain,” Syrah wrote.
“While Syrah supported the [initial] inclusion of the tariff code [covering several equipment types], we recommended that the exclusion process extend through 2027, when graphite supply chain investments are expected to accelerate in the US,” Wells wrote.
Despite exploring various supply options, the company concluded that importing equipment from China is currently the only viable choice, given the costs, lead-times and risks involved.
“Ex-China vendors have not yet established a reputation [for providing] an alternative option,” Wells said, stressing the operational necessity of these imports.
Similarly, eVAC Magnetics supported machinery exclusions that, it said, would facilitate its efforts to establish domestic magnet production in the US.
“The tariff-free imports for equipment critical to the domestic supply of permanent magnets will benefit the expansion of this industry in multiple ways,” Travis Norton, strategic initiatives officer at e-VAC, said. “Allowing case-by-case tariff-free imports will make domestic producers more competitive.”
Construction work was begun in March this year by eVAC, the US subsidiary of German magnet manufacturer VAC Group, on a sintered neodymium iron boron (NdFeB) rare earth magnet plant in the US, scheduled to be operational in the late autumn of 2025.
The US Battery Machine Builders coalition, meanwhile, has said that excluding battery machines from new or increased duty rates would “undermine the goal of counteracting China’s unfair trade practices.”
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