North American graphite producers have formally asked the US government to impose tariffs as high as 920% on Chinese suppliers of critical battery materials, citing unfair trade practices by the Chinese government. The bold move, led by the American Active Anode Materials Producers (AAAMP), is aimed at countering China’s overwhelming dominance of the global graphite market and protecting nascent domestic industries in the United States and Canada.

Petitions filed with the U.S. Department of Commerce and the U.S. International Trade Commission (ITC) allege that China exports natural and synthetic graphite at artificially low prices to the detriment of North American competitors. These practices are enabled by China’s labor and environmental standards, which allow producers to rapidly expand production and dominate the market, the groups argue.

Advantages of Chinese graphite

Graphite, which constitutes the largest component by volume in electric vehicle (EV) batteries, can be processed from natural sources or synthetically produced. China leads the world in the production of both types and currently holds more than 95% of the global market share for battery-grade graphite.

Earlier this month, China further tightened graphite export controls, limiting supplies to the United States and escalating trade tensions. These restrictions have prompted Western countries to accelerate efforts to diversify supply chains and reduce dependence on China for critical minerals essential to the clean energy transition.

Tariffs as a defense measure

The United States currently imposes a 25% tariff on most Chinese-made graphite, but AAAMP argues that this rate is insufficient to counter “adverse trade practices” by Chinese suppliers. There is. The group argues that current tariffs could be easily absorbed by Chinese rivals and are ineffective in protecting North American producers.

If the proposed 920% tariff goes through, it would significantly increase the cost of importing graphite from China, creating a competitive opportunity for domestic producers. However, no official response to this petition has yet been received from the Department of Commerce or the ITC.

Broad strategy for imports from China

The calls for significant tariffs come amid increased scrutiny of China’s dominance in key mineral sectors around the world. President-elect Donald Trump has announced his intention to impose broad tariffs on Chinese goods, and his advisers are pushing for measures targeting critical foreign minerals, including those linked to China. .

Not all U.S. companies in the critical minerals sector agree to blanket tariffs. For example, Jervois Global (ASX:JRV) recently closed its only cobalt mine in the US before it was operational due to competition from Chinese producers, but has proposed an alternative solution. The company proposes requiring manufacturers to source materials from Western suppliers rather than imposing universal tariffs.

Impact on global markets

If the United States adopts the proposed tariffs, it could reshape the global graphite market. Rising import costs for Chinese graphite could prompt domestic and allied producers to expand production and stimulate investment in North America’s vital minerals industry.

Companies like NOVONIX Limited (NASDAQ: NVX, ASX: NVX) are already working to strengthen their North American supply chains. NOVONIX, a leading manufacturer of synthetic graphite, recently received a $755 million loan from the U.S. Department of Energy to build a large-scale synthetic graphite production facility in Chattanooga, Tennessee. The facility is expected to start operating in 2025 and reduce the region’s dependence on imports from China.

Additionally, new investments in natural graphite mining and processing could provide the United States with a path to long-term energy security. But achieving this goal will require significant government support, streamlined permitting processes, and technological advances to match China’s economies of scale.

Australia’s role in supply chain diversification

While the US fights imports from China through tariffs and trade litigation, Australia has emerged as a key ally in critical mineral supply chains. Australia, with its vast reserves of natural graphite, rare earth elements and high-purity silicon, is positioned to play a vital role in reducing the world’s dependence on China.

Companies such as Syrah Resources (ASX: SYR) and Lynas Rare Earths (ASX: LYC) are leading the way in exporting critical minerals to Western markets. For example, Syrah operates one of the world’s largest natural graphite mines in Mozambique and is expanding processing capacity in the United States.

As countries such as the United States and Canada invest in domestic production, a partnership with an Australian company could be an immediate solution to fill gaps in the supply chain while scaling up local facilities.

Looking to the future

AAAMP’s petition is an important step in North America’s efforts to take back control of the supply chain for EV batteries and other technologies. The proposed 920% tariff may face opposition from some sectors, but it highlights the urgency to address China’s dominance in the graphite market.