Reciprocal Tariffs: Exemptions and Impacts on the U.S. Lithium Industry
How the new tariffs will impact the lithium industry, U.S. manufacturing, trade agreements, and strategies for growth in the lithium-ion battery sector, and what they mean for domestic production.
After the dust settled, it turns out that nearly all raw metals, minerals, and chemicals needed for U.S. manufacturing are exempt from the new reciprocal tariffs, according to the 37-page Annex II document. This article will examine the impact of these tariffs on lithium hydroxide and lithium-ion batteries and assess how the policy affects trade agreements with countries like Japan, South Korea, and EU members. Furthermore, the article will discuss potential strategies to boost domestic production and manufacturing in the U.S.
Tariff Structure Overview
The tariff structure under the Executive Order “Regulating Imports with a Reciprocal Tariff,” issued April 2, 2025, introduces a two-tiered approach: A baseline 10% ad valorem tariff applies to all goods entering the U.S. from all trading partners starting April 5, 2025, unless explicitly exempted (e.g., Annex II goods or qualifying USMCA imports).
Then, starting April 9, 2025, country-specific tariffs listed in Annex I take effect for designated nations, replacing the 10% baseline rather than stacking with it, unless pre-existing duties (like Section 301 tariffs) apply. For countries not listed in Annex I, the 10% baseline remains ongoing. This structure aims to rebalance trade broadly at first, then target specific trading partners with tailored rates.
Exemptions: Lithium Hydroxide Details
Lithium hydroxide (HS Code 2825.20.00) remains unaffected by the new tariff. The base tariff on lithium hydroxide is 3.7%, but if imported from China, an additional 25% tariff applies under 19 U.S.C. 2411, part of the Section 301 action authorized by the Trade Act of 1974. This is confirmed in the Federal Register notice titled “Notice of Modification: China’s Acts, Policies, and Practices Related to Technology Transfer” dated September 18, 2024. This brings the total tariff on Chinese lithium hydroxide to 28.7%.