US battery costs face sharp rise on tariffs

Spanish Market: Battery materials, Metals
03/04/25

Battery cells imported into the US market face a sharp cost increase following the imposition of US president Donald Trump's new tariff regime.

The US last year imported $23.8bn worth of battery cells, according to trade data, mostly from China, Japan and South Korea, all of which have been hit with "reciprocal" tariffs after Trump's executive order was signed on 2 April.

China, by far the largest supplier of battery cells to the US market, is now subject to an effective 64.9pc tariffs, with the extra 34pc duty on top of other tariffs from previous administrations. Battery cell imports to the US from China last year amounted to $16.45bn, 70pc of the total, up from just $2bn in 2020. The new tariffs would add $8bn to this cost for US carmakers and battery pack producers.

Japan and South Korea, long-standing US allies and partners in battery cell production, face tariff rates of 24pc and 25pc, respectively. The US last year imported $1.7bn worth of battery cells from Japan and $1.3bn from South Korea. Despite the tariffs, there is potential that Japan and South Korea could eat into China's share of US imports, because of the gulf between their respective tariff rates and being the world's only real alternative producers at this point.

A longer-term outcome could be that the US domesticates some of this battery cell production, a trend that was already under way, thanks to Biden's Inflation Reduction Act, which allocated federal funding to battery giga-factories and other battery-related projects throughout the US. But building battery cells is not simple. The US will need access to raw materials, some of which are heavily affected by the new tariffs. Cell-making technology, controlled by the three Asian countries, could be included in any retaliatory measures.

"The Trump administration's 'Liberation Day' announcement on tariffs are the biggest trade shock in history, representing a historic shift away from the long-term trend towards free trade," chief economist at investment bank Macquarie Ric Deverell said. "The tariff increase far exceeds earlier expectations, highlighting the strong 're-industrialisation' ideology of the Trump administration."

Battery materials impact mixed

The impact on key materials for the battery supply chain is mixed, with some metals and pre-cursor materials exempted from the new measures, while some key materials are included.

Lithium carbonate, lithium hydroxide, cobalt sulphate, cobalt metal, manganese dioxide, natural graphite powder and flakes all are exempt from new additional tariffs.

Key materials that are not exempt include nickel sulphate, manganese sulphate, phosphoric acid, iron phosphate and synthetic graphite, all of which will be included in the tariff regimes implemented on individual countries.

The US has no nickel sulphate production and imports most of its material from Belgium and Australia, which exported 1,872t and 1,060t to the US last year, respectively. Tariffs on Belgium will fall under the EU, which will be applied at 20pc, while Australia is subject to a tariff of 10pc. Indonesia, the world's largest nickel producer, is subject to a tariff of 32pc, although so far it has not supplied material to the US. Total US imports of nickel sulphate last year reached 3,738t, up from just 1,125t in 2020.

With regard to synthetic graphite, another essential item for battery cell production, the US imported 115,778t in 2024, up substantially from 30,109t in 2020. Most of this came from China, at 74pc of the import market. This material now will be subject to 54pc tariffs, significantly increasing this cost for US battery cell producers.

By Thomas Kavanagh and Chris Welch

US lithium-ion battery imports by country $bn

Feedstock materials exempt from 2 Apr tariffs t

US manufacturing investments by stage of supply chain $bn

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