Volvo shuffles production amid US-China tariff tiff

Premium brand switches up import and export plans to reduce levies on their vehicles.

Swedish marque Volvo has been forced to switch up its production schedule in an effort to dodge higher American import tariffs on Chinese-made vehicles.

Industry journal Automotive News says Volvo has cancelled plans to export the all-new S60 sedan (above/below) from its new American factory to the Chinese market, just months after commencing production.

The XC60 crossover also won’t be imported to the United States from China, while shipments of the S90 from China to North America will be “dramatically” reduced.

American President, Donald Trump, imposed a 27.5 per cent tariff on Chinese automotive imports in July. Soon after, China’s Xi Jinping upped levies to 40 per cent on American imports in retaliation.

Volvo now plans to ‘mostly export’ the S60 from its Charleston factory in the US.

“We’ll go at this change not with a smile, but we know what we need to do,” said Anders Gustafsson, president of the Swedish marque’s US division.

“We have a global manufacturing structure that helps us manoeuvre in these tough waters.”

The company has elected not to pass the cost of tariffs to US customers of the Chinese-made XC60, with Gustafsson adding this move has had a significant toll on Volvo’s profits.

“We are absorbing the tariffs, and that really is what you saw in our financial results,” he said.

“But we can, under no circumstances, absorb tariffs in the long run. It’s huge.”

Another model that could get caught up in the trade war is the XC90 SUV (above), which the American boss reportedly labelled a “profit machine”.

The flagship SUV is set to be produced at the new Charleston facility from 2022 to supply the European and Chinese markets, though the recent tariff issues could make that a losing strategy, according to Gustafsson.

Initially Volvo planned to employ around 3900 people within five years at the US plant, but that could change as the company tries to avoid more tariff drama.

“This is not easy, it’s a big, big, big thing. It’s extremely painful. I don’t want to sit here and smile and say everything is great. Absolutely not. But that’s life,” Gustafsson added.

Various manufacturers have been forced to shuffle or scrap production plans amidst the ongoing tariff battle between China and the US, including Ford, which was forced to cancel the Focus Active crossover for the US because the cost of importing it from China is too high.