Tariffs and Trade Policy
Background
Tariffs are an essential tool to protect the nascent domestic Li-ion battery materials manufacturing industry from unfair trade practices, including forced technology transfers and intellectual property theft that have resulted in Chinese dominance of the battery materials market. Several tariff authorities can be used to combat these practices, including Section 301 tariffs, Section 201 tariffs, Section 232 tariffs, and Antidumping/Countervailing Duty tariffs.
Section 301 tariffs are the most prominent tariff tool for Li-ion battery materials and were originally imposed by the Trump Administration on a wide variety of Chinese imports (>$500B/year). These tariffs have been extended and expanded under the Biden Administration with most goods taxed at a 25% rate.
BATT Coalition’s 2025 Goals
Consideration Of Higher Section 301 Tariffs
While most of the Section 301 tariffs on Chinese imports are currently at the 25% rate, the United States Trade Representative (USTR) intends to impose 100% tariffs on EVs and 50% tariffs on semiconductors imported from China. The BATT coalition will work with its member companies to conduct a pricing and market analysis to determine the appropriate Section 301 tariffs on Chinese imports of Li-ion battery materials and components required to help foster a domestic upstream Li-ion battery manufacturing supply chain.
Goal: If the analysis determines that higher Section 301 tariffs on Chinese imports of Li-ion battery materials and components are required to foster domestic production and recycling, the BATT Coalition will urge the USTR to impose higher Section 301 tariffs on Li-ion battery materials and components imported from China.
Inclusion of all Li-ion Battery Materials under Section 301 Tariffs
Electrolytes are a critical component of Li-ion batteries and are mixtures of a solvent (typically a blend of ethylene carbonate (EC), dimethyl carbonate (DMC), fluoroethylene carbonate (FEC)), and a salt (typically lithium hexafluorophosphate - LiPF₆), as well as small quantities of various additives. EC, DMC, FEC, and LiPF₆ are not included in the existing Section 301 tariffs or the Biden Administration’s proposed May 2024 modifications.
Currently, there is no domestic production of lithium-ion battery solvents or lithium hexafluorophosphate (LiPF₆) salt. Both battery solvents and salts are subject to wild price fluctuations. For example, LiPF₆ has fallen from $100/lb to $10/lb and the price of ethylene carbonate (EC) has fallen from $4,000/ton to $700/ton. With China’s dominance over the supply chain (produces 80% of the world’s LiPF₆), additions to the Section 301 tariff schedule are necessary to ensure stable markets.
Goal: The BATT Coalition advocates for the USTR to include EC, DMC, FEC, and LiPF₆ in its proposed additions to Section 301 tariffs.
Consideration of Other Tariff Authorities
While the Section 301 tariffs are the most prominent, other tariff authorities can also be utilized to help foster a domestic upstream Li-ion battery manufacturing supply chain. For example, Section 232 tariffs have been imposed on steel and aluminum imports for national security reasons; Section 201 tariffs have been imposed on solar panels and washing machines to protect domestic manufacturing; and, Antidumping/Countervailing Duty tariffs have been imposed on a wide variety of products when manufacturers can prove that foreign companies are selling these products in the U.S. at prices below the prevailing prices in the exporting country or the imports have benefited from state subsidies.
Goal: The BATT Coalition will explore the need and justification for using other tariff authorities to protect the domestic Li-ion battery materials industry. If additional protection is justified, the BATT coalition will petition for the use of non-Section 301 tariff authorities.