Volvo Moves XC60 Production to Avoid Tariffs on Chinese Imports

Volvo has been making XC60 crossovers for the U.S. market in China, but that plan isn’t going to fly with the newly imposed tariffs on Chinese imports. To solve this problem, Volvo will shift production of U.S.-bound XC60s to Europe, where it already builds copies of the crossover for the local market.

Speaking with Reuters, Volvo CEO Hakan Samuelsson said the shift has already started. “We will of course reshuffle here and take XC60s for the U.S. … from our factory in Europe, and let China produce for other markets.”

The Chinese-built XC60s that would normally go to the U.S. will be sent to other markets around the globe. Also, some will be sent back to Europe to get the right mix. Volvo is owned by China’s Geely.

President Donald Trump has announced import tariffs against other countries in order to reduce the U.S. trade deficit. He has also talked about putting a 20 percent tax on European carmakers.

It wasn’t until very recently that Volvo had a production presence in the U.S. The automaker just opened a new plant in South Carolina last month, where the very first Volvo made in the U.S. will roll off the line this fall. The plant will start off producing the S60, and in 2021, the automaker will add production of the XC90.

Producing vehicles in the U.S is another complication with President Trump’s tariffs, however. Samuelsson told CNBC, “With our [Charleston] factory we are going to employ up to 4,000 people, half of those are planned to be building cars for export, so if these tariffs would in any way restrict the possibilities for us to export out of South Carolina, that would of course mean less employment in Charleston.”

The 2018 Volvo XC60 has been fully redesigned with new engines, a new exterior design, and a new suspension setup. The compact crossover now rides on the modular SPA platform. In our First Test, we complemented its luxurious interior but lamented its jittery ride on imperfect road surfaces.

Source: Reuters, CNBC

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