Is the ban leaking? Lithium-ion cells after the US Section 301 step to 25%

Trade-flow companion to the price wedge (R72). DUAL-SCORE / alternative-track signal — never folded into any Tier-1 exposure score. The divergence between the country on the customs declaration and the ownership of the plant that made the goods IS the signal. Research, not investment advice; nothing here alleges customs fraud by any named company — every figure below is a lawful, declared trade flow, and that is precisely the point.

Verdict

Every other case in this corpus reads a control that arrived by surprise. This one reads a control that arrived on a published timetable, and the flow answers a different question because of it.

USTR's Section 301 four-year-review determination (final 13-Sep-2024, Federal Register 18-Sep-2024) set two dates for Chinese lithium-ion batteries: EV cells to 25% on 27-Sep-2024, and non-EV cells — the energy-storage and consumer line — to 25% on 1-Jan-2026. The second date was therefore known 15 months in advance.

US customs data shows the door closing on schedule, and shows that the replacement capacity was already standing when it closed:

Source: UN Comtrade free public preview API, reporter USA (842), flow M, HS 850760, monthly, periods 2024-01 → 2026-05.

The step is sharp and lands on the date: China's monthly line runs $1,114m in Dec-2025 (60.4% share — the front-run) and $483m in Jan-2026 (38.4%), a −57% break across the 1 January boundary. Chinese share has not recovered above 42% in any month since.

Note the denominator: the world line fell 26%. The four Southeast Asian surgers are not filling a growing market — they are taking share in a shrinking one. That is what makes the substitution real rather than a demand artefact.

The corporate pipe (the common-ownership tell)

The surge origins are not implausible producers. Malaysia and Thailand really do make lithium-ion cells now. The question is who owns the plants, and the answer is traceable to government sources.

Malaysia — EVE Energy Malaysia Sdn. Bhd. The Malaysian Investment Development Authority (MIDA, the federal investment agency) announced the launch of the plant at Padang Meha, Kedah, and names the parent directly: EVE Energy Co., Ltd., founded 2001 and listed on the Shenzhen GEM board, stock code 300014. MIDA's release describes it as "the first overseas factory to achieve mass production and delivery of EVE Energy," and states the facility will serve customers "across Southeast Asia, Europe, and North America." Inauguration 16-Dec-2024; first cell off the line 16-Feb-2025; Phase Two into operation in February 2026 (China State Construction Engineering Corporation, the contractor, corporate news, Feb-2026).

The Malaysian US-bound line tracks that build-out month for month:

Thailand — NV Gotion Co. Thailand had essentially no US-bound battery line at all ($2m for the whole of 2024), then shipped $123m in 2025 and $98m in the first five months of 2026 alone. The plant that appeared in between is a joint venture of Gotion High-tech (China) and PTT (the Thai state oil and gas company) at Siam Eastern Industrial Park II, Rayong — opened 7-Dec-2023, 2 GWh/yr rising to 8 GWh in phase two. PTT's president stated the explicit goal: to move Thailand "from importer to manufacturer and exporter of lithium-ion batteries." Thailand also hosts the SVOLT–Banpu pack plant in Chonburi (10,000th pack, Jun-2025), and approved a ~$1bn Sunwoda cell investment in Mar-2025.

So the flag on the box changed. The ownership of the capacity behind it did not.

The input-line test

The plywood and cotton cases taught the diagnostic: read the input line into the surger, not the finished-good origin line. Malaysia reports both sides, so it can be run directly (UN Comtrade, reporter Malaysia 458, annual):

Malaysia's Chinese battery-and-parts intake roughly doubled in 2025 while its total battery exports grew 14% — the signature of new Chinese-owned lines ramping on Chinese-sourced inputs. Combining both headings, Chinese input into Malaysia runs at 87% (2024) and 91% (2025) of Malaysia's entire US-bound shipment value.

But the honest reading stops short of the plywood verdict. The composition inversion is absent: in plywood, China's exports to the surger flipped from the finished good to the input. Here both lines rose together, which is what a genuine cell plant sourcing separator, electrolyte and cathode from its parent's supply base looks like — and also what pass-through assembly looks like. HS6 cannot separate them. Thailand's own 2025 reporting is not yet in the free preview tier, so the same test cannot be run there.

Transmission chain

`` Chinese cell makers (EVE, Gotion, SVOLT, Sunwoda) → 15-month published tariff runway (Sep-2024 → 1-Jan-2026) → capacity built in Kedah / Rayong / Chonburi / Bac Giang → Chinese-sourced cathode, anode, separator, electrolyte shipped in → cells assembled and lawfully origin-conferred as MY / TH / VN → US buyer books a non-Chinese origin at 0% Section 301 → dependency on the same corporate supply base, unchanged ``

What this implies for the Tier-1 blind spot

The Tier-1 exposure score reads country of origin. On that reading, US battery dependence on China fell from 69.0% (2024) to 59.3% (2025) to 38.8% (Jan–May 2026) — a 30-point improvement in 18 months. Add the Chinese-owned share of the Malaysian, Thai, Vietnamese and Indonesian lines back and most of that improvement is a change of flag, not a change of counterparty. A tariff that a corporate group can answer by building a plant is a tax on routing, not a constraint on control.

The transferable rule this case adds — the lead-time rule. The circumvention mode is a function of the control's notice period, not its severity:

• A snap ban (antimony, Dec-2024, effective the day it was announced) leaves no

time to build, so the response is mode A — relabelling through a country that cannot make the material. The fingerprint is loud, the fix is fragile, and a customs authority can shut it overnight.

• A scheduled, pre-announced tariff (this case, 15 months' notice) is answered by

mode B — real capacity, lawfully relocated. The fingerprint is quiet, the volume-implausibility detector correctly does not fire, and the result is far harder to reverse: a fraudulent flag can be revoked with a ruling; a 10 GWh plant in Kedah cannot.

For a buyer, that inverts the intuition about which control is more protective. The control with the generous compliance runway is the one that most reliably fails to change who you depend on.

Footnote on the other direction. China's own answer — MOFCOM/GAC Announcement 58 (9-Oct-2025), export licensing on ≥300 Wh/kg cells, artificial graphite anode material and the production equipment — was suspended on 7-Nov-2025 by Announcement 70, one day before it was due to bite, deferred to 10-Nov-2026. So the seller-side leg is currently switched off, and everything observed above is the buyer-side tariff acting alone. If Announcement 58 reactivates in November 2026, the same offshore plants become the exposed party — they are the ones importing Chinese anode material.

Caveats

• All figures are customs VALUE, not tonnage — deliberately. The Comtrade free

preview tier does not carry reported net weight for this heading: every partner in a given month returns the identical unit value ($50.49/kg in Mar-2025, $41.68/kg in Feb-2026), i.e. the quantity field is derived from value, not reported. It is unusable and is not used here. Consequence: cell prices fell steeply across this window, so value declines overstate volume declines. China's −56% by value is not a −56% fall in cells shipped.

• This is mode B, not mode A. Nothing is relabelled. The plants are real, the

origin is lawfully conferred, and the volume-implausibility test does not fire and should not. Reading this case as smuggling would be wrong.

• The tariff is not the only cause. China's line was already falling through

mid-2025 (share 65.4% Jan–May 2025 → 51% by Oct-2025), spanning the April–May 2025 US–China tariff escalation. The 1-Jan-2026 step is a clean break on the date, but it sits on top of a pre-existing decline and a 26% contraction in total US imports.

• HS 850760 pools everything — EV cells, grid-storage cells, consumer packs,

power-tool cells. The Section 301 EV/non-EV distinction is an HTS-10 line and is invisible at HS6, so the two tariff dates cannot be separated in this data.

• Plant-to-shipment attribution is inference. The ownership hops (EVE→EVE Energy

Co. Ltd; NV Gotion→Gotion + PTT) are traced to named public sources. The link from those specific plants to the US-bound line is circumstantial — timing, stated target market, and the absence of any other new capacity of that scale. It is not shipment-level evidence.

• Viet Nam's ownership leg is untraced. Viet Nam is the second-largest surger

(+129%) and no named registry or filing hop was established here. Labelled gap, and the obvious next step.

• Thailand and Viet Nam do not report to the free preview tier for 2025–26, so the

input-line test could only be run on Malaysia.

• Mirror mismatch. Malaysia reports $198m of 850760 exports to the US in 2025;

US customs reports $581m of imports from Malaysia. Both are used above from their own reporter's side and are not reconciled — a known Comtrade asymmetry, flagged rather than smoothed.

Sources

• UN Comtrade free public preview API — https://comtradeapi.un.org/public/v1/preview/C/M/HS

(reporter USA 842, flow M, HS 850760, monthly 2024-01→2026-05) and .../C/A/HS (reporter Malaysia 458, flows M and X, HS 850760 and 850790, annual 2023–2025; reporter Thailand 764, 2024). All trade figures above.

• USTR — *Notice of Modification of Action: China's Acts, Policies, and Practices

Related to Technology Transfer, Intellectual Property, and Innovation*, final determination 13-Sep-2024, published 18-Sep-2024. https://www.federalregister.gov/documents/2024/09/18/2024-21217/notice-of-modification-of-action-china-related-tariffs

• Malaysian Investment Development Authority (MIDA) — *EVE Energy Malaysia Sdn. Bhd.

Launches Advanced Battery Manufacturing Facility in Malaysia* (parent company name, Shenzhen GEM stock code 300014, plant location, stated North America market). https://www.mida.gov.my/media-release/eve-energy-malaysia-sdn-bhd-launches-advanced-battery-manufacturing-facility-in-malaysia/

• China State Construction Engineering Corporation — *Phase Two project of the EVE

Energy lithium battery plant in Malaysia put into operation* (Feb-2026). https://english.cscec.com/CompanyNews/CorporateNews/202602/3929145.html

• The Nation Thailand — Chinese-Thai battery plant opens in Rayong (NV Gotion =

Gotion + PTT joint venture, Rayong, 2→8 GWh, opening 7-Dec-2023, PTT president quote). https://www.nationthailand.com/business/automobile/40033622

• CnEVPost — *Thailand approves Sunwoda's $1 billion investment in EV battery cell

plants* (13-Mar-2025). https://cnevpost.com/2025/03/13/thailand-approves-sunwoda-investment-ev-battery-cell-plants/

• Repo anchor action: docs/iptm/actions/2024-05-14-us-section-301-tariff-hikes-china.md

(tariff schedule and effective dates).

• Repo related action: docs/iptm/actions/2025-10-09-china-mofcom-announcement-58-lithium-battery-graphite-export-controls.md

(the suspended seller-side leg, and the Announcement 70 deferral to 10-Nov-2026).