U.S. Battery Tariffs on China Enter a New Phase: What Will Actually Change in Japan–China Battery Trade?

A measure that had long been built into the U.S. tariff schedule entered a new phase on January 1, 2026. Additional Section 301 tariffs on Chinese-made non-EV lithium-ion batteries, natural graphite and certain related products rose to 25%. Tariffs on lithium-ion batteries for electric vehicles had already been raised to 25% in 2024, while tariffs on Chinese-made EVs had risen to 100%.[1] The policy applies directly to U.S.–China trade, but its effects do not stop at the U.S. border. For Japanese companies, the more important question is how the global battery supply chain will be reorganized around each product's final market.

China's battery industry cannot be understood simply as an exporter of “battery materials.” According to the IEA, China accounted for about 80% of global battery-cell production in 2024, close to 85% of cathode active materials and more than 90% of anode active materials.[2] Much of the cathode and anode material, electrolyte and separator output is first converted into cells and battery packs in China, then exported as batteries, energy-storage systems or as part of Chinese-made EVs. At the same time, some materials and cells are shipped directly to manufacturers in Japan, South Korea and elsewhere. China therefore sits across multiple stages of the value chain—from materials to cells, packs and finished vehicles—and the tariff impact depends on the stage at which a product crosses a border.

Japan–China battery trade is also more complex than “Japan buys materials from China.” JETRO's analysis of Japanese trade statistics shows that China accounted for 76.8% of the value of Japan's lithium-ion battery imports in 2024, up markedly from 55.0% in 2019.[3] Higher U.S. tariffs on Chinese products therefore do not directly impose additional tariffs on battery materials or batteries exported from China to Japan. Although higher barriers to the U.S. market may lead to expectations that some Chinese supply could be redirected to Japan or other markets, this does not mean that Japan's supply-demand balance will immediately shift enough to push prices lower, nor does it imply that Chinese suppliers will reduce prices for Japanese customers. For procurement aimed mainly at the Japanese domestic market, the direct effect of U.S. tariffs is relatively limited.

What does need to be reassessed is the supply chain for products that ultimately enter the U.S. market. If a Japanese company sources Chinese materials or cells, carries out further processing or assembly in Japan or a third country, and then sells the finished product into the United States, tariff classification, origin determinations and customer requirements on supply-chain provenance become more important. Procurement can no longer be designed simply around which country offers the lowest material price; it also has to start with where the final product will be sold.

By raising the barrier for Chinese battery products entering the U.S. market, the policy may also encourage companies to expand production in the United States, Europe and Southeast Asia. But shifting the location of production does not mean upstream material supply immediately shifts away from China. The IEA data show that China still has highly concentrated capacity in upstream segments such as cathode and anode active materials. New cell capacity and supply-chain investment are emerging outside China, but it will be difficult in the short term to replicate China's existing industrial clusters and scale.[2] A more realistic outcome is that companies configure production locations, material sources and compliance arrangements separately for the U.S., Japanese, European and other markets, rather than one country or region replacing the Chinese supply chain in full.

From the perspective of China–Japan battery trade, higher barriers to the U.S. market naturally raise the question of whether some products previously destined for the United States could be redirected to Japan or other markets. However, the more significant change brought about by higher U.S. tariffs is not simply whether Chinese battery products will be diverted to Japan, but that global battery supply chains are increasingly being reorganized according to their final sales markets. Products for the United States, Japan and Europe may increasingly require different choices on origin, production location, material sourcing and market-access rules. Japanese companies will find it harder to design procurement and manufacturing solely around the lowest cost; they will also have to consider where the product will ultimately be sold and whether the corresponding supply chain can remain stable over time. In other words, competition in the battery industry will increasingly be about supply-chain design capability, not just products and price.