A U.S. Department of Commerce investigation has found that Chinese battery component manufacturers received subsidies of up to 721%. In response, the United States has decided to impose countervailing duties on key Chinese battery components.
According to Bloomberg News on May 20 (local time), the U.S. Commerce Department's investigation revealed that Chinese companies such as Huzhou Kaijin New Energy Technology and Panasonic Global's China subsidiary, which produce core battery components, received subsidies as high as 721%.
Huzhou Kaijin is the largest manufacturer of synthetic graphite in China. Following this preliminary decision, the U.S. government is expected to impose countervailing duties on Chinese battery component manufacturers, including Huzhou Kaijin.
Previously, U.S. graphite producers requested an investigation, arguing that Chinese companies were making it difficult to compete by lowering prices through massive state subsidies. This investigation is separate from the broad tariffs and item-specific tariff policies of the Donald Trump administration.
Countervailing duties are measures intended to offset Chinese government subsidies. A separate investigation into allegations of dumping is also underway. Final decisions on both countervailing and anti-dumping duties are expected by the end of this year. Anti-dumping duties are imposed when foreign goods are sold below fair value, harming domestic industries, and are levied up to the difference between the fair value and the selling price.
Meanwhile, Bloomberg predicted that imposing countervailing duties, at a time when consumer tax credits for electric vehicles are being eliminated, will likely lead to higher prices for American-made electric vehicles. According to Bloomberg NEF analysis, about 56% of U.S. graphite demand related to the energy transition last year was met through imports from China.
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