Navigating the U.S. Graphite Maze

Each day seems to add new layers of complexity to the geopolitical landscape, with graphite now caught in the shifting tides of U.S. trade policies. Tariffs have become a strategic lever for the administration, aimed at strengthening domestic industries and reducing reliance on foreign imports, especially those from China.

Currently, four key tariffs are impacting or have the potential to impact the US graphite market:

1. A 25% tariff on CSPG has been in place since June 15, 2024, as part of the reinstated Section 301 tariffs.
2. A 10% tariff on all imports from China (effective February 4, 2025).
3. A 25% tariff on natural flake graphite, scheduled to take effect on January 1, 2026.
4. Potential tariffs resulting from an ongoing U.S. International Trade Commission investigation into allegations that China is dumping graphite products at below-market prices, undermining U.S. producers.

As a result, notwithstanding other factors, these tariffs – individually and collectively – are expected to have a significant impact on the graphite market, not only in the U.S. but also globally. Recent events have underscored the growing need for supply chain security and independence.

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U.S. Flake Graphite Import Dependency

In 2024, the U.S. imported approximately 60,000 metric tons of natural graphite. Out of this, an estimated 43% (25,800 tons) was sourced from China​.  The average price of flake graphite at the time was $1,070 per ton, according to data from the U.S. Geological Survey’s National Minerals Information Center​.

Below is an analysis (USD) of how the tariffs on China directly apply to the base price of graphite

Scenario	Tariff Rate	Additional Cost per Ton	Final Price per Ton	Total Cost for 25,800 Tons	Increase Over No Tariff
No Tariff	0%	$0	$1,070	$27,606,000	0
Current Tariff	10%	$107	$1,177	$30,366,600	$2,760,600
Future Tariff (25%)	25%	$294	$1,471	$37,958,250	$10,352,250

However, it’s important to clarify that this analysis focuses solely on natural graphite imports in raw form. When it comes to the next stage of processing – spherical purified graphite and coated spherical purified graphite, which are essential for lithium-ion battery anodes – the story is entirely different. China maintains near-total control over the global supply of these value-added products, leaving the U.S. with little domestic production capacity. While tariffs may shift raw material trade flows, the real challenge lies in breaking China’s grip on the midstream and downstream graphite supply chain, where dependency remains virtually absolute.

In response to the near monopoly China has on the graphite supply chain, countries like Australia are striving to break this dependency by implementing significant production tax incentives. The recently passed Future Made in Australia (Production Tax Credit and Other Measures) Bill 2024 introduces a 10% tax concession to subsidise the costs of processing and refining critical minerals, including graphite. This initiative aims to bolster domestic processing capabilities, reduce reliance on Chinese imports, and strengthen Australia’s position in the battery materials supply chain.

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Implications for the Market

While the U.S. graphite market may still be in its infancy, these tariffs – though modest on their own – could fuel price pressures when combined with other factors, such as supply chain concentration and environmental regulations.

In response to these tariffs, OEMs and battery/anode manufacturers will respond to these developments by:

• Shifting supply chains: OEMs are reducing dependence on Chinese graphite through partnerships with graphite companies. For example, Westwater Resources, in partnership with SK On, is developing anode materials for U.S. battery plants and constructing the Kellyton Graphite Processing Plant in Alabama to boost domestic graphite processing.
• Developing local capacity: Firms like NOVONIX are accelerating U.S.-based production, with initiatives like their synthetic graphite plant in Tennessee, supported by U.S. government funding. Syrah Resources’ Vidalia facility is another example of this shift, as it scales up to supply battery-grade anode material domestically.

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Industry Pushback and Potential Impact

We’ve already heard that the proposed tariffs on Chinese graphite imports have sparked strong opposition from major players, with analysts warning they could significantly raise battery prices and slow EV adoption. Tesla and Panasonic claim that no U.S. supplier currently meets their graphite specifications.

However, in a recent GraphiteHub interview, Erik Olson, spokesperson for the American Active Anode Material Producers, challenged this narrative. He stated, “Tesla and Panasonic kept saying, ‘They’re not qualified,’ but they control the qualification process. They could modify or speed it up if they wanted to, but they choose not to because they want cheaper product from China.”

So maybe it was never about qualification but simply a reluctance to pay higher prices. Now, with shifting trade policies, they’re left with no choice – scrambling to catch up after years of inaction.

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Why Are Tariffs Needed on Graphite?

Domestic manufacturers, represented by the American Active Anode Material Producers (AAAMP), argue that Chinese graphite imports are sold far below fair value, preventing U.S. producers from establishing competitive operations. The petition filed in December 2024 aim to address these unfair trade practices. Erik Olson, speaking on behalf of AAMP, emphasized, “Right now, the Chinese are able to dump product at ultra-low prices that aren’t based on market dynamics. We can’t compete, and it’s preventing the industry from growing.”

The U.S. currently depends heavily on Chinese imports for its graphite supply. Without intervention, domestic efforts to build an independent graphite supply chain could be stifled by continued price undercutting.

The tariffs serve to:

• Correct market imbalances by countering artificially low prices due to foreign dumping and subsidies.
• Encourage domestic investment by giving U.S.-based producers a fairer chance to compete and grow.
• Strengthen critical mineral security by diversifying supply chains and reducing dependency on a single source.

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What Does This Mean?

The introduction of these tariffs signals a shift in the global graphite landscape, with a clear message: the era of unchecked dependency on Chinese imports may be nearing its end. Supply chain security is no longer just a theoretical concern – it’s a strategic imperative. The question remains: will this be the spark that finally drives meaningful change in the graphite supply chain, or will it be another stalled opportunity in the face of competing priorities?

For too long, supply outside China has remained underdeveloped. We’ve heard the same story for years – China dominates the industry, and while diversification is always expected, it never seems to materialise. But could this finally be the moment when the shift to non-China supply sources gains real momentum? Only time – and either decisive action or continued inaction – will tell.