General Motors has ordered several thousand suppliers to withdraw Chinese-origin parts from their supply chains, reflecting growing frustration in the automotive industry due to escalating geopolitical tensions between the United States and China and ongoing trade disruptions, Reuters reports.
Starting in late 2024, and starting in 2025 with even greater urgency, GM has been pressuring suppliers to shift supplies of raw materials and components to other countries, aiming for some of them to completely sever ties with China by 2027 as part of a broader strategy to strengthen the "resilience" of supply chains The new initiative is the result of unstable tariffs under Trump, restrictions on exports of rare earths, and a shortage of microchips that have repeatedly disrupted production plans. Although GM has already invested in AMERICAN sources of lithium, rare earths, and microchips, the current efforts are much broader and cover major components of lighting, electronics, and instruments. The company prefers North American suppliers for production in North America, but accepts suppliers from outside the United States if they are located outside of China and other countries subject to restrictions. However, industry executives warn that recycling supply chains built over 20-30 years in China will be expensive, slow and difficult, given China's dominance in many segments of the automotive industry.
Despite the recent lifting of duties, automakers and suppliers continue to struggle to "mitigate the risks" of their supply chains amid concerns about further disruptions.
