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As the Office of the U.S. Trade Representative (USTR) has signaled additional tariffs of 10% or more on 60 economies, including South Korea and China, under Section 301 of the Trade Act, LG Group has drawn attention by asking Washington to exempt overseas battery materials and minerals from the tariffs. Because the company depends heavily on some countries, including China, imposing tariffs on these goods could disrupt battery production in the United States.
According to industry sources on the 9th, LG submitted an opinion letter containing these points to the USTR on the 6th. Section 301 of the Trade Act is a trade tool that allows the United States to independently retaliate against unfair trade practices by other countries. Earlier, after the reciprocal tariffs imposed on major countries by the Donald Trump administration last year were ruled illegal by the Supreme Court, the USTR launched a Section 301 investigation related to forced labor.
The aim is to identify countries that have failed to adequately block imports of goods produced with forced labor and impose tariffs of 10% to 12.5%. The USTR placed 60 economies, including South Korea and China, on the list of countries subject to tariffs and solicited related opinions from those countries and companies.
LG said that six affiliates, led by LG Energy Solution, plan to invest more than $28 billion in the United States through 2029, and stated that "for the investment to proceed steadily, battery-related materials must be exempted from tariffs." LG did not disclose the specific items for which it requested exemptions, but they are said to mainly include Chinese materials and minerals.
This is because major battery manufacturers, including LG Energy Solution, rely on some countries, including China, for key materials and minerals, so additional tariffs would inevitably increase import costs. According to the Korea International Trade Association, as of the first half of 2023, South Korea's dependence on China for cathode and anode materials—key battery materials—reached 96% and 93%, respectively.
LG explained to the U.S. side that "LG Energy Solution and LG Chem are making efforts to source materials from U.S. companies," but "some materials still cannot be sourced in sufficient quantity or quality to meet customer specifications."
LG's argument is that imposing tariffs on key materials and minerals would increase its investment burden and, consequently, delay the completion of the battery manufacturing ecosystem in the United States. LG emphasized, "We have expanded advanced manufacturing ecosystems and industrial capacity in the United States through strategic investment," adding that "an exemption measure could encourage the continued expansion of the battery supply chain while additional battery material production capacity is built up within the United States."
Meanwhile, other battery makers including Panasonic, and demand-side companies such as Tesla, also submitted opinion letters to the USTR expressing concerns over the management burden from the additional tariffs.
