Trump administration delivers another major blow to electric car industry with latest tariff

The Trump administration has announced a steep tariff on a key raw material used in electric vehicle batteries — a move that could significantly increase the cost of producing EVs in the United States. The Commerce Department revealed a 93.5% tariff on Chinese graphite on July 17, accusing Beijing of “dumping” the material at below-market prices into the US market.

The decision was welcomed by domestic graphite manufacturers, who argue that Chinese companies have long dominated the global supply and made it nearly impossible for American firms to compete, according to a CNN report.

Graphite, though inexpensive at less than $2 per pound, plays a critical role in EV battery production. Imports from China surged to $347 million in 2023 — more than doubling in just two years — based on the latest available data from the Commerce Department. However, testimony during the tariff investigation, including from Tesla, noted that US suppliers are still unable to produce graphite at the ultra-high purity required for EV batteries.

“Lithium-ion battery producers demand [graphite] with a 99.9 percent carbon purity level, meaning extremely low metallic impurities,” said Matt Nicely, Tesla’s attorney, at a January hearing. “Not a single US producer is able to produce [graphite] to these exacting specifications. (Domestic producers) cannot blame imports [….] when they are not yet able to produce the product the market demands.”

Mike O’Kronley, CEO of Novonix, a US-based graphite producer, told CNN the tariff could provide a major boost to domestic production. “This is going to be very transformative for the graphite industry in the United States,” he said. “Manufacturers in China have really overinvested, and they have a lot of additional capacity, so they are exporting a lot of that volume. It’s hampering the development of the US critical minerals.”

The article notes that the move is widely seen not only as an escalation of trade tensions between the US and China, but as a potential setback for American EV production.

The tariff announcement came as the Trump administration moved to reduce government backing for the electric vehicle industry. The administration is actively seeking to cut or claw back federal loans used for building EV and battery plants. Additionally, the recently passed spending and tax bill, signed by Trump earlier this month, eliminates a $7,500 federal tax credit for EV buyers.

The Biden administration had previously imposed a 25% tariff on graphite in 2024 and initiated the investigation that led to Thursday’s announcement. When combined with other duties the Trump administration has levied on Chinese goods, Chinese graphite could soon face a total tariff burden of approximately 160%.

By Khagan Isayev