The latest to join the U.S. tariff conversation is Volvo sternly warning that the customers will have to bear the brunt of the additional taxes.
If U.S. President Donald Trump’s 25% tariff on imported has not already sent shivers down the automobile world, he has now decided to slap the European Union with a 50% duty. Trump announced that the 50% tariff will come into play from June 1 and the reason behind doubling down on the EU is that they have been ‘hard to deal with on trade’.
Without mincing any words, Volvo CEO Hakan Samuelsson told Reuters that a Volvo buyer will have to pay for the additional tariff-related hikes. He also said that the new 50% tariff will change Volvo Cars’ plans for the U.S. market as it might not be able to sell the EV, EX30.
Is it all doom and gloom for Volvo?
The good news for Volvo Cars is that it manufactures S60 and EX90 in the U.S and it has plans to ramp up its South Carolina factory’s production further. What will be a challenge for Volvo and for other automobile companies is how to tackle the tariffs on imported cars. Samuelsson is hopeful that the U.S. and EU will come to some agreement over the tariffs. He said, “I believe there will be a deal soon. It could not be in the interest of Europe or the U.S. to shut down trade between them.”
Speaking about its EV plans, Samuelsson explained that Volvo was gearing up to launch the EX30, which was initially only made in China. In the wake of tariffs, the company decided to wait for its Ghent plant in Belgium to start rolling out the EX30. Volvo believed that they would be able to price the EX30 competitively. With the new 50% tariffs on the EU, this makes it is ‘almost impossible” to launch it in the U.S. market.
Earlier, Volvo Cars had announced changes would take place at its South Carolina plant, which would include a 5% cut in workforce.