Potential 920% US tariff on Chinese graphite sparks cost fears for Korean battery-makers
Korean anode material-makers may gain edge as industry seeks non-Chinese alternatives
Korean battery-makers are bracing for a possible rise in production costs, as the US Department of Commerce prepares to announce a preliminary review of its investigation into alleged violations of antidumping regulations by Chinese graphite producers, potentially resulting in tariffs as high as 920 percent.
According to industry sources on Wednesday, the US department is expected to reveal its findings as early as May 19. The investigation stems from a petition filed in December 2024 by the American Active Anode Material Producers, a group of US and Canadian graphite miners.
This upcoming decision follows the US International Trade Commission's preliminary determination in February, which found that Chinese graphite exports were disrupting the US graphite industry by being sold at artificially low prices. The finding could pave the way for the Commerce Department to raise tariffs on Chinese graphite imports from their current levels of 10 percent for natural graphite and 25 percent for synthetic graphite, according to sources.
Both US agencies are expected to issue final rulings later this year on whether Chinese firms engaged in unfair pricing and whether countervailing duties are warranted.
Mounting cost challenges
Industry watchers note that despite the recent de-escalation between Washington and Beijing — with both sides agreeing to pause most tariffs for 90 days — the US government is likely to continue pursuing countervailing measures against Chinese graphite.
'While US federal agencies may not impose the full 920 percent tariff, they will likely aim to neutralize China's unfair competitive edge in graphite,' said Kim Tae-hwang, an international trade professor at Myongji University.
'Even with the tariff pause, Trump has not exempted Chinese-made automobiles, parts, steel or aluminum — signaling a continued focus on reshoring key manufacturing supply chains.'
Korean battery manufacturers are closely monitoring developments, as they currently rely heavily on Chinese graphite. According to the Korea International Trade Association, South Korea sourced 98.8 percent of its artificial graphite and 97.6 percent of its natural graphite from China in 2023, making them the top two graphite imports.
The reason behind this dependence is cost efficiency: Chinese graphite is 30 to 40 percent cheaper than Korean alternatives. Consequently, Korea's reliance on Chinese artificial graphite rose further in 2024, up from 97.1 percent in 2023.
'If the US implements sharply higher tariffs without a grace period, Korean battery manufacturers will be forced to expand sourcing from outside China, particularly from domestic suppliers,' said an anonymous industry source.
The anticipated pivot away from Chinese graphite could benefit Korean battery material suppliers, who have long struggled to compete with cheaper Chinese products. This dynamic worsened when the US Inflation Reduction Act allowed EV tax credits of up to $7,500 for vehicles using Chinese graphite until the end of 2026 — even though China is designated as a "Foreign Entity of Concern."
'Many Korean battery-makers are hoping for another extension of the grace period, but it's unlikely,' said another industry insider. 'The US government could argue that enough time has already been given to shift sourcing to alternative regions such as Latin America and Africa.'
Among Korea's battery material producers, Posco Future M is currently the only major player manufacturing anode materials using graphite. However, it remains heavily reliant on Chinese imports for spherical graphite — a processed form of natural graphite used in EV battery anodes.
To reduce this dependency, Posco Future M last month announced a 396.1 billion won ($280 million) project to build an independent supply chain for spherical graphite, aligning with its strategy to secure a non-Chinese supply chain ahead of 2027, when Inflation Reduction Act rules are expected to exclude Chinese graphite-based materials.
Over the past two years, Posco Future M has also signed a long-term supply agreement with Australian mining firm Syrah Resources for natural graphite from Mozambique. In addition, its sister company, Posco International, has secured natural graphite reserves in Tanzania.
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