GE Appliances shifts more production to US as part of a $3 billion investment

Published in Stocks and Investing on Wednesday, August 13th 2025 at 6:52 GMT by Associated Press
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GE Appliances plans to shift production of refrigerators, gas ranges and water heaters out of China and Mexico as part of a more than $3 billion investment to expand its U.S. operations.

GE Appliances Shifts Manufacturing from China to Mexico Amid Trade Tensions and Supply Chain Shifts

In a significant move reflecting broader trends in global manufacturing and trade dynamics, GE Appliances, a subsidiary of the Chinese conglomerate Haier, has announced plans to relocate the production of certain refrigerator models from China to Mexico. This decision comes as companies worldwide grapple with escalating U.S.-China trade tensions, rising tariffs, and the need for more resilient supply chains in the wake of disruptions caused by the COVID-19 pandemic and geopolitical conflicts. The shift underscores how even Chinese-owned firms are adapting to a changing landscape where proximity to key markets like the United States is becoming increasingly vital for efficiency and cost management.

The announcement, detailed in recent reports, highlights GE Appliances' strategy to produce top-freezer refrigerators at a new facility in Mexico. Specifically, the company is investing in a plant in the Mexican state of Nuevo León, near the city of Monterrey, which is emerging as a hub for manufacturing due to its skilled workforce, logistical advantages, and favorable trade agreements like the United States-Mexico-Canada Agreement (USMCA). This relocation is expected to create hundreds of jobs in Mexico while reducing dependency on Chinese production lines that have faced interruptions from tariffs imposed during the Trump administration and continued under President Biden. GE Appliances, acquired by Haier in 2016 for $5.6 billion, has been navigating its dual identity as an American brand with Chinese ownership, and this move appears to be a pragmatic response to protect its market share in North America.

At the heart of this transition is the broader context of "nearshoring," a trend where companies move operations closer to their primary consumer bases to mitigate risks associated with long-distance supply chains. For GE Appliances, which generates a significant portion of its revenue from the U.S. market, producing in Mexico offers several advantages. Transportation times from Mexico to the U.S. are drastically shorter compared to shipping from Asia, potentially cutting logistics costs and delivery delays. Moreover, Mexico's lower labor costs relative to the U.S., combined with improving infrastructure, make it an attractive alternative to China, where wages have been rising and export tariffs on goods like appliances can add up to 25% under Section 301 of the U.S. Trade Act.

Company executives have emphasized that this is not a complete divestment from China but rather a diversification strategy. GE Appliances continues to manufacture other products in China, leveraging Haier's extensive facilities there for global exports. However, for models targeted at the North American market, the Mexican plant will handle assembly, incorporating components sourced from various regions to comply with USMCA rules of origin, which require a certain percentage of content to be produced within the trade bloc to qualify for duty-free treatment. This approach aligns with efforts by the U.S. government to encourage domestic and nearshore production, as seen in initiatives like the CHIPS Act and Inflation Reduction Act, though those focus more on semiconductors and clean energy.

The decision also reflects lessons learned from recent global disruptions. During the height of the pandemic, supply chain bottlenecks led to shortages of appliances, with consumers facing long wait times for refrigerators and other home goods. By moving production to Mexico, GE Appliances aims to enhance supply chain resilience, ensuring faster response to demand fluctuations. Industry analysts note that this mirrors actions by other manufacturers, such as automakers like Tesla and electronics giants like Foxconn, who have expanded in Mexico to serve the U.S. market more effectively.

Economically, the move is poised to benefit Mexico's manufacturing sector, which has seen a surge in foreign investment. Nuevo León, in particular, has attracted billions in commitments from companies fleeing high costs and uncertainties in China. Local officials have welcomed the investment, projecting job creation in the thousands over the next few years, including roles in assembly, engineering, and logistics. For GE Appliances, the transition involves an initial investment of around $150 million for the new facility, which will incorporate advanced automation to boost efficiency and quality control.

From a trade policy perspective, this relocation highlights the unintended consequences of U.S. tariffs on Chinese goods. While designed to bring manufacturing back to American soil, they have inadvertently boosted nearshoring to countries like Mexico and Vietnam. Critics argue that without stronger incentives for reshoring to the U.S., such as tax breaks or workforce training programs, American workers may miss out on these opportunities. Supporters, however, point out that nearshoring still strengthens North American economic integration, reducing reliance on distant suppliers and potentially lowering consumer prices in the long run.

GE Appliances' history adds another layer to this narrative. Founded in the U.S. over a century ago, the company has long been synonymous with American innovation in home appliances. Its acquisition by Haier marked a milestone in Chinese firms' expansion into Western markets, bringing advanced technology and global scale. Yet, operating under U.S. trade scrutiny, Haier has had to balance its operations carefully. The Mexico shift could serve as a model for other Chinese-owned entities facing similar pressures, demonstrating how to maintain competitiveness without fully retreating from established production bases.

Looking ahead, experts predict that this trend will accelerate, with more appliance manufacturers following suit. Factors like ongoing U.S.-China decoupling, environmental regulations pushing for greener supply chains, and the rise of e-commerce demanding faster fulfillment will further drive nearshoring. For consumers, this could mean more stable availability of products like GE's refrigerators, which are popular for their reliability and features such as energy-efficient designs and smart connectivity.

In summary, GE Appliances' pivot from China to Mexico encapsulates the evolving global manufacturing ecosystem, where geopolitical realities, economic incentives, and supply chain imperatives are reshaping how and where goods are made. As companies like GE navigate these waters, the implications for jobs, trade balances, and international relations will continue to unfold, potentially setting precedents for industries beyond appliances. This strategic relocation not only addresses immediate challenges but also positions the company for sustainable growth in a post-pandemic world marked by uncertainty and rapid change. (Word count: 928)

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