Consulting Report

21 Feb 2024

Enabling North American Graphite Growth

In collaboration with
the North American Graphite Alliance

This report explores the global graphite market, rationales for trade action on Chinese graphite, and the history of Section 301 tariffs on US imports of graphite anode material from China.

Global demand for graphite grew 52% in the last five years and is expected to grow 70% over the next five years, mainly due to the increased demand for graphite anode material used in lithium-ion batteries. In 2023, China supplied 92% of the graphite anode material used in batteries; it is forecast to supply 86% of anode material in 2028. China dominates both natural and synthetic sources of graphite. China is believed to have significant overcapacity in graphite production but continues to invest in the expectation of soaring global demand. This has resulted in falling prices that may not reflect the full cost of production.

Although the economic benefits of free trade are well established, trade protections can be justified in several situations:

1. Infant industry protections. North American graphite production is a growing industry which helps support the growing lithium-ion battery and electric vehicle industries.
2. In response to unfair trade practices by the exporter. The Chinese graphite industry receives implicit government subsidies and may be engaging in dumping.
3. Strategic protections. Graphite has been listed as a critical strategic mineral by the US government.
4. In response to poor environmental or labor practices. Chinese graphite production has high carbon emissions and makes use of questionable labor transfer programs.

In 2018, the US applied Section 301 tariffs on imports of Chinese graphite, along with approximately $500 billion of Chinese goods. These tariffs were raised from 10% to 25% in 2019. However, in 2020, the US Trade Representative approved a request from EV manufacturers to exempt most graphite anode material used in batteries from these 301 tariffs. As of February 2024, the US Trade Representative is reviewing Section 301 tariffs against China.

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Hamilton Galloway

Head of Americas Consulting, Economic Impact

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