North American graphite producers are bracing for upcoming White House announcements on tariffs and potential traceability requirements.

On Friday, the US treasury and energy departments are reportedly expected to classify graphite as “non-traceable” under the Inflation Reduction Act (IRA)’s Section 30D Clean Vehicle Tax Credit. This means automakers would be able to keep buying graphite from Chinese entities of concern without preventing end-buyers from accessing the $7,500 tax credit on eligible EVs.

According to the North American Graphite Alliance (NAGA), removing traceability requirements and allowing Chinese material to benefit from IRA subsidies will have damaging effects on domestic graphite producers.

“What they’re hearing from automakers and others that, given the amount of graphite that has to go into a battery... that they can’t get enough right now for North America or from allied countries to be able to get cars qualify for the 30D credit and so the White House is considering calling graphite not traceable, or maybe putting a waiver in place, which we think would be hugely detrimental to the industry,” NAGA spokesperson Erik Olson tells Kallanish.

The alliance has also been lobbying the government to re-impose new tariffs on three Chinese graphite products, which are used in battery anode materials.

The United States Trade Representative is due to make a decision this month on Section 301 China tariff product exclusions, which were previously scheduled to expire on 31 December, and later extended to 31 May.

The three products have been excluded from 301 tariffs since May 2020, when the government approved a request from EV manufacturers who said they could not access an adequate supply of graphite from non-Chinese sources.

NAGA says its members cannot compete with Chinese companies, which “can set the global price of graphite and engage in unfair trade practices due to China’s massive overcapacity of graphite.” It adds the absence of tariffs is counterproductive when the government is supporting the development of the industry via IRA incentives and loans.

China is the world’s largest graphite producer and accounts for 98% of announced anode-manufacturing projects through 2030.

“There’s a lot of investment and if we don’t have the proper protections in place for this industry, they will have a hard time surviving, especially when it comes to Chinese graphite moving into the country and we’ve seen and heard from our companies that there are concerns with pricing product coming in at a fast pace, and trying to drown out the nascent industry,” Olson warns.

North American demand for anode material is estimated to rise by 300% over the next five years, while global demand will jump by 189% over the same period.

According to Oxford Economics, imposing tariffs is justified if the purpose is protecting nascent industries, addressing unfair trade practices, prioritising national security considerations and ensuring responsible labour and environmental practices. Economists argue all of these apply in this scenario.

Olson adds: “We’ve heard good reviews from administration officials about the report that was published by Oxford Economics, the need to support the industry, so I think that’s positive but [there is] no formal confirmation about the exclusions that’s currently in place for all types of graphite being lifted.”

The US Treasury and Energy Departments and the United States Trade Representative were contacted for comment.