Volvo Cars’ CEO, Hakan Samuelsson, indicated on Friday that customers will likely bear most of the costs stemming from increased tariffs. He suggested that if taxes rise further, it may become unfeasible to import one of the more affordable cars into the U.S.
In a related note, President Trump proposed a 50% tariff on goods from the European Union starting June 1, arguing that trade negotiations with the EU have been challenging.
Samuelsson mentioned to Reuters that the proposed tariff would hinder Volvo’s ability to market their Belgian-made EX30 electric vehicles in the U.S.
“That’s nearly impossible,” he remarked, adding that due to the fluid nature of this situation, he wouldn’t delve into further speculation.
Trump’s tariffs on car imports and automotive parts have thrown a wrench into the global auto industry, prompting some companies to revise production strategies to minimize tariff-related expenses, while others are holding out to see if any policy changes occur.
The EX30, which Samuelsson described as “very badly hit” because its initial production was based in China, represents Volvo’s effort to offer budget-friendly electric vehicles to consumers.
The vehicle was initially set to have a starting price of $35,000, but hefty tariffs on Chinese-made cars have delayed its sales in the U.S. market until production finally commenced in Ghent, Belgium, this past April. Currently, the car’s starting price sits at $46,195.
Other budget car manufacturers such as Ford, General Motors, and Toyota import their vehicles from Mexico, South Korea, or Japan, facing a similar risk regarding pricing amid tariff fluctuations.
Samuelsson expressed optimism that Europe and the U.S. might soon strike a deal, despite the looming threat of increased tariffs.
“I truly believe a deal will come soon. The interests of Europe and the U.S. should not allow trade to be disrupted,” he said.
Most Volvo vehicles designated for the U.S. market, which represented 16% of the company’s total sales last year, are imported from Europe. The company plans to boost production in South Carolina and other facilities soon, with possibilities of introducing new models that Samuelsson has noted may include a mid-sized plug-in hybrid.
In the meantime, Volvo’s stock dropped by 5%.
