The U.S. Department of Commerce imposed a 93.5% tariff on high-purity graphite imported from China, a crucial component in electric vehicle batteries, as announced on Thursday.
The New York Times reports that this move could drive up electric vehicle prices by more than 1,000 USD. China currently dominates the global production of high-purity graphite.
The Commerce Department stated that the steep tariff was imposed after determining that Chinese firms were dumping high-purity graphite into the U.S. market. This decision is expected to have far-reaching consequences for many automakers and battery suppliers, including Ford, Panasonic, and LG Energy Solution, which are building battery manufacturing facilities in the United States.
Adding to the pressure on EV prices, the U.S. government will discontinue the electric vehicle tax credit of up to 7,500 USD effective September 30. The combination of these factors is likely to result in a significant increase in EV prices.
Although graphite accounts for less than 8% of battery production costs, batteries are the single largest component of an EV’s price. Consequently, a twofold increase in graphite prices could push EV prices up by more than 1,000 USD.
The Trump administration has also been imposing tariffs on imported automotive parts and vehicles.
EV manufacturers, including Tesla, have previously opposed tariff petitions from U.S. and Canadian graphite suppliers. In a February letter to the government, Tesla argued that U.S. graphite suppliers lack the technical capability to mass-produce graphite meeting the quality and purity standards required by battery manufacturers.
Panasonic recently began new battery cell production at its facility in De Soto, Kansas, while LG Energy Solution operates two battery plants, including one in Tennessee. These plants were established with federal financial support, which the Trump administration is now seeking to eliminate. Meanwhile, Tesla, the American electric vehicle giant, officially launched operations at its Gigafactory battery plant in Shanghai, China, on February 11.
