America's factory boom now a bust as China cuts off graphite sales, likely to push tariff repeals

The United States has seen an epic factory boom, from early 2021 through 2022, which tripled construction spending for manufacturing facilities. Most of these factories are devoted to the electrification of our transportation networks, and to semiconductors. Further, the objective is to build these technologies domestically and thereby wrest control of these supply and production chains from China.

But all that manufacturing will require huge production of batteries, which in turn require graphite. China has monopolies on most of the refined and synthetic graphite that is used for such batteries, and in late 2023 announced strict export curbs on the metal. Graphite exports immediately collapsed over 90%, leaving North America and Europe scrambling for new sources.

The earliest domestic (US) production of new graphite will be in 2027, and in a best-case scenario will be about a fourth of anticipated US demand.

These realities leave China in a most advantageous position: they can either continue the graphite bans and produce all the batteries for the global market themselves, or use their monopolistic position in graphite to negotiate sharp reductions in tariff rates for other Chinese exports.

Resources and links:

Axios, Factory construction spending booms under Biden

Bloomberg, US Manufacturing Boom Is About More Than EVs, Chips

US transportation and electrification, battery belt boom cannot continue without graphite

Graphite One and Lucid Enter into Non-Binding Supply Agreement

Bloomberg, Chinese Exports of Battery Material Graphite Plunge on Controls

Closing scene, Grasslands of Inner Mongolia, near Hulunbeir

[DailyBeatings]

US: "No bread for you"
China: "No flour for you"

[rwksasc]

Sack the secretary of commerce. China has been urging win-win but the US insists on playing win-lose. Arrogance!

[Mel_Gerrard]

The regime in Washington is completely out of control

[linphilip]

No person in the entire USA knows how important it is for you to build things from end to end. Good for the Chinese who will never lose.

[btizviq]

The biggest US national threat is the US government! 🤣🤣🤣

[iWantPeace]

America is all talk. However, when they really get into action, it's even more embarrassing.

[seeker]

What happens when economic thinking and strategy are replaced by PR, campaigning, wishful thinking, bluster and exceptionalism.

[Quagma-bi]

This is the most informative channel on YouTube. Thank you yet again for these reports.

[enzhus]

When US says get something by 2027, you can safely assume it's 2072 😂

[davidaaa]

I'm a US citizen, the circus show in Washington is not funny. The economic situation here is getting worse. Homelessness and job layoff are increasing. Food banks are getting busier and we continue to send more money to Ukraine.

[cwhoho]

USA think short term and quick profit..china think long term.

[MichaelCuthbertson-zlin]

Another awesome economic commentary Kevin!
Blessings from Australia.

[thewelshdragon.]

This is what happen when the US is run by lawyers, and accountants.

[johntse]

the fact that China has not even started to really stop graphite to force negotiation meant that China is not hungry enough for semiconductors and also controlling the price and supply of graphite to force any new supply to have to overcome the cost. it is like death by a thousand cuts, just enough supply to keep customers going but at a high cost and preventing new graphite investment to taking root because that price can come down really quick if a competitor starts to supply from new investments. even if the us uses their own graphite sources, if the cost of the graphite is expensive, then, any batteries produced will still not able to compete anywhere without tariffs.

[KeithRowley]

Why would China throw away its advantages by exporting key elements to the US??

[sciagurrato]

“Supply chain” for a US politician means drugs or money or…worse.

[koyko]

They longer you experience China the more you realise how powerful the supply chain is

[thinkslow]

We appreciate China's patience 🙏🙏🙏

[woosiewmei]

Kevin, why is the US Administration spending millions to hire all these smart people but cant figure out the simple supply chain issue that you have so eloquently explained.

[cabasadefogo]

Even if Graphite one get it going, they cannot get it efficient enough and cheap enough to compete. It means Graphite one will be a subsidized national champion with limited market to only North America. And with limited revenue they are unlikely to have any technological breakthrough.