Graphite Exclusions from Section 301 Tariffs Extended

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By Anjali Joshi

On 16 December 2022, the Office of the United States Trade Representative (USTR) announced a nine-month extension of 352 product exclusions from additional import tariffs imposed under Section 301 on products from China. These exclusions were scheduled to expire at the end of 2022 but are now extended until September 30, 2023. The list of exclusions covers a wide array of products on all four Section 301 “lists” imposed in 2018, including artificial graphite which is used to manufacture lithium-ion batteries for EV and BESS applications.

Graphite is the only material, with no alternatives, that is used to make anodes in lithium-ion batteries. According to the World Bank, graphite accounts for about 53% of the mineral demand in batteries, as against lithium which accounts for only 4% of the total demand.
The U.S. Geological Survey (USGS) has listed this battery raw material as a “critical mineral.” Currently, there is no graphite mining or battery-grade graphite refining in the United States, which makes the country entirely reliant on imports of battery-grade graphite. 

China is the world’s biggest producer of coated spherical graphite which is used to produce lithium-ion batteries. In 2021, China produced approximately 70% of graphite for EV batteries in the
United States.

In October 2021, the USTR said that it would consider tariff exclusions for imports that can only be obtained from China. In early December 2021, Tesla, the largest U.S. EV maker, requested to waive tariffs on both natural and artificial graphite in three separate filings with the USTR office. The company claimed that only China could provide the quantity of graphite it needs to manufacture its batteries in the United States. Korean cell maker SK On also supported the extended waiver for tariffs so that it can source enough graphite for its U.S. cell manufacturing facilities. Following these public comments, AUSTR reinstated 352 product exclusions, including one for graphite, on March 28, 2022.

With no domestic graphite production, and significant expected growth in domestic battery cell production capacity, CEA expects a continuous increase in imports of battery-grade graphite from China, at least until the expiration of these tariff exclusions in October 2023.

Source: CEA Research