Tesla has ordered suppliers to ditch China-made parts in its US-made cars, months after Trump-era tariffs ignited a global trade war.
The electric-vehicle company revealed it told suppliers to eliminate China-made materials from American-assembled cars, with plans to switch entirely to non-Chinese parts within two years, sources familiar with the situation exclusively told the Wall Street Journal.
In the aftermath of the Covid-19 pandemic, Elon Musk‘s company sought to cut ties with China for component production and urged suppliers to manufacture parts elsewhere, including Mexico and Southeast Asia.
A China-based executive reported earlier this year that Tesla’s Shanghai plant has roughly 400 Chinese suppliers, over 60 of which contribute to the company’s worldwide production, according to the WSJ.
While China’s scale, low costs and weak currency make many components cheaper, sources told the outlet that the trade conflict has complicated Tesla’s pricing strategy.
The unpredictability comes from President Donald Trump’s aggressive April tariffs – roughly 10 percent on products from almost every country in the world – with Chinese imports hit particularly hard at 57 percent.
The measure aimed to pressure China’s economy, but it failed to inflict significant damage.
Tesla revealed it told suppliers to eliminate China-made materials from American-assembled cars, with plans to switch entirely to non-Chinese parts within two years
After the Covid-19 pandemic, Elon Musk’s company sought to cut ties with China for component production and urged suppliers to manufacture parts in Mexico and Southeast Asia
Tesla’s move accelerated after Trump’s aggressive April tariffs – roughly 10 percent on products from almost every country in the world – with Chinese imports hit particularly hard at 57 percent
Chinese tech firms quickly made up for declining exports to the US by ramping up shipments to dozens of other nations with ‘breathtaking speed,’ according to a New York Times analysis.
When Trump and Beijing enacted matching tariffs between the third quarters of 2024 and 2025, Chinese exports to the US fell by some $38 billion.
Meanwhile, China dramatically boosted exports elsewhere, adding $12 billion to Hong Kong, $11 billion to Vietnam, $5 billion to Thailand and $15 billion to the European Union.
Automakers were blindsided in the spring when China limited exports of certain rare earths and magnets vital to car manufacturing.
Producing more than 90 percent of the world’s processed rare earths – from smartphones to military gear – China is now rapidly increasing its trade presence in Africa, as reported by NYT.
The capital of China has also ramped up exports of electric vehicles, batteries, steel equipment and solar panels across Africa, South America and Asia.
‘They should not be surprised that China is able to find markets outside of the advanced economies,’ Mary Lovely, a senior fellow at the Peterson Institute for International Economics, told the paper.
China’s ban on Dutch company Nexperia semiconductor exports – used in car electronics and lights – has also left automakers scrambling for chips, according to WSJ.
When Trump and Beijing enacted matching tariffs between the third quarters of 2024 and 2025, Chinese exports to the US fell by some $38 billion
Automakers were blindsided in the spring when China limited exports of certain rare earths and magnets vital to car manufacturing
China dramatically boosted exports elsewhere, adding $12 billion to Hong Kong, $11 billion to Vietnam, $5 billion to Thailand and $15 billion to the European Union (pictured: Chinese President Xi Jinping)
Last month, during their first face-to-face meeting in six years (pictured), Trump struck a deal with Chinese President Xi Jinping and slashed 10 percent from China’s tariff bill
Most of Nexperia’s chips are manufactured across Europe, but final processing and packaging take place in China before being exported worldwide.
The company was previously owned by a Chinese parent on the US trade blacklist. Although the Dutch government reclaimed control, China blocked chip exports as it controls whether the products leave the country or not.
As a result, automakers around the world, who rely on these chips for car electronics and lighting, have faced shortages.
Last month, during their first face-to-face meeting in six years, Trump struck a deal with Chinese President Xi Jinping, after which Beijing permitted some Nexperia chips to reach overseas customers.
Trump told reporters on Air Force One after the historic sit-down on October 29 that he slashed 10 percent from China’s tariff bill because he believes their leader will work to stymie the flow of deadly drugs to the US.
Beijing further agreed to maintain soybean purchases, provide temporary one-year access to rare earth materials and make an unspecified commitment to combat fentanyl trafficking.
Daily Mail reached out to Tesla for comment.