U.S. seals trade agreement with Japan, imposes 93% tariff on Chinese graphite imports

The automotive industry is facing significant changes with the announcement of new trade deals and potential shifts in graphite production.

The European Union is considering a similar deal with the US, proposing a 15% baseline tariff on imports, including vehicles and automotive parts. This move comes as a response to the US-Japan trade deal, which has already reduced vehicle and automotive parts imports from 27.5% to 15%.

The US-Japan trade agreement, signed by President Donald Trump and Treasury Secretary Scott Bessent, is expected to attract Japanese investment in the US. Japanese carmakers, such as Toyota and Honda, are likely to benefit the most from this deal. They can now export vehicles directly to the USA with reduced tariffs, instead of producing vehicles in Mexico or Canada where tariffs under USMCA are 25%.

However, not all parties are in favour of these new trade deals. The American Automotive Policy Council (AAPC), representing GM, Ford, and Stellantis, has expressed negative views, stating that these deals could harm the US industry and US automotive workers.

Meanwhile, the US has also agreed on trade deals with Indonesia and the Philippines, both involving a 19% tariff on imports. These deals may impact the Asian automotive industry, particularly those companies with operations in these countries.

Apart from trade deals, the US is also focusing on localising supply chains, particularly for graphite, an important material in the manufacturing of EV batteries. The US has been 100% reliant on graphite imports from countries including China, with China controlling about 90% of the market.

The US Commerce Department has imposed preliminary anti-dumping tariffs of 93.5% on Chinese graphite imports, with potential final tariffs of up to 700% for specific companies. This move could encourage local production of graphite, as seen with Titan Mining's plans to open a graphite mining site in the town of Fowler, New York, although it will not be operational for a few years.

It's worth noting that graphite production has not been carried out domestically since the 1950s. The move towards local graphite production could help reduce the US's reliance on foreign graphite imports, particularly from China, and address national security concerns.

China has previously put controls and restrictions on the export of high-quality graphite to the US, including in 2023, citing national security concerns. The shift towards local production could mitigate these risks and ensure a stable supply of graphite for the US automotive industry.

In conclusion, the automotive industry is facing significant changes with the announcement of new trade deals and potential shifts in graphite production. While these changes may bring challenges, they also present opportunities for growth and innovation in the US and beyond.

U.S. seals trade agreement with Japan, imposes 93% tariff on Chinese graphite imports