Supply chain shift: GM tells suppliers to exit China by 2027; move signals deeper US-China trade decoupling

General Motors (GM) has asked thousands of its suppliers to eliminate parts sourced from China by 2027, in one of the auto industry’s most aggressive moves yet to insulate its operations from deepening US-China trade tensions, Reuters reported, citing four people familiar with the matter.According to the report, GM has directed suppliers to find alternative sources for raw materials and components, with the eventual goal of moving its entire supply chain out of China. The automaker first approached some suppliers with this directive in late 2024, but the push gained momentum earlier this year amid an escalating trade conflict between Washington and Beijing.GM executives told suppliers the move is part of a broader strategy to enhance “supply chain resiliency,” Reuters said. The company’s leadership has repeatedly cited the need to mitigate risks arising from geopolitical disruptions, such as rare-earth bottlenecks and computer-chip shortages that have plagued global automakers since 2021.The directive covers parts and materials used in vehicles manufactured in North America — GM’s biggest production hub — and extends to countries like Russia and Venezuela, which face similar US trade restrictions. However, China remains the largest source of affected components, Reuters reported.The automaker, which has already diversified its sourcing of electric vehicle materials by investing in a US lithium mine and partnering with a domestic rare-earth company, is now broadening its efforts to include basic parts and industrial inputs.GM declined to comment on its supplier discussions. However, CEO Mary Barra told investors during an October earnings call, “We’ve been working now for a few years to have supply chain resiliency… sourcing parts in the same country where we build the cars, whenever possible.”Shilpan Amin, GM’s global purchasing chief, reiterated at a recent industry event that the company can no longer rely solely on the lowest-cost countries. “Resiliency is important — making sure you have more control over your supply chain and you know exactly what is coming from where,” Amin said, according to Reuters.Automakers brace for tariff shocks and rare-earth curbsThe decision comes despite recent signs of easing trade tensions. Following an October meeting between US President Donald Trump and Chinese President Xi Jinping, both nations agreed to roll back select tariffs and export restrictions. But automakers remain wary, Reuters noted, as the sector continues to face fallout from unpredictable trade dynamics.Earlier this year, China restricted exports of rare-earth materials crucial for car electronics, sending automakers scrambling to stockpile supplies. The situation worsened in October when Beijing expanded those restrictions, triggering warnings of widespread factory disruptions.Adding to the strain, a separate dispute between Chinese and Dutch authorities led China to halt shipments from Nexperia, a major supplier of low-cost automotive chips, further fuelling concerns about the fragility of global production networks.A complex and costly transition for suppliersIndustry executives told Reuters that reconfiguring supply chains away from China will take years and entail significant costs. China’s dominance in key manufacturing areas — from automotive lighting to tooling and die-making — makes it difficult for suppliers to quickly pivot.“It’s a big effort. Suppliers are scrambling,” one senior executive at a major auto parts manufacturer told Reuters.Collin Shaw, president of MEMA, the Vehicle Suppliers Association, said carmakers and their partners have been working to “de-risk” supply chains, but decades of dependence on Chinese manufacturing won’t be easy to undo.“In some cases, this has been 20 or 30 years in the making, and we’re trying to undo it in a few years,” Shaw told Reuters. “It’s not going to happen that fast.”GM’s move, analysts say, reflects a broader industry trend –an attempt to balance economic realities with national security imperatives as the world’s two largest economies continue to reshape global trade rules.