USA TODAY International Edition
Volvo CEO: No vehicle tariffs
Auto industry, US would benefit, Samuelsson says
The head of at least one major automaker is backing the notion of total elimination of auto tariffs, a move sure to catch the attention of the Trump administration as it threatens tariffs on imported cars.
Volvo CEO Hakan Samuelsson told USA TODAY on Wednesday that he supports a policy of no tariffs on vehicles between the U.S. and Europe or China. And Volvo is a global player: a Swedish brand owned by a Chinese company that is preparing to open its first U.S. plant this fall.
Elimination of auto tariffs would be “good for the industry and good for the U.S.,” Samuelsson said.
Meanwhile, German automakers BMW, Volkswagen and Mercedes maker Daimler are ready to support ending all car tariffs between Europe and the U.S., The Wall Street Journal reported Wednesday.
Samuelsson’s comments come amid concerns of a trade war as President Donald Trump threatens increased tariffs on imported vehicles, a development that has set off alarms in Europe and China.
Trump imposed 25 percent tariffs on vehicles imported from China, of which there are few. Chinese sales of U.S.-made vehicles totaled about 266,657 in 2017, according to LMC Automotive.
China, which is lowering most global vehicle tariffs from 25 percent to 15 percent, is set to retaliate by raising U.S.-imported vehicle tariffs to 40 percent July 6. That will hurt companies that make vehicles in the U.S. for export to China – most notably BMW and its X5 and X6 SUVs, the Mercedes GLE and GLS SUVs, Ford’s Lincoln models and electriccar maker Tesla, according to UBS auto analyst Colin Langan. Europe tacks on a 10 percent tariff on cars from the U.S., while the U.S. imposes a 2.5 percent tariff on Europeanmade cars and 25 percent on light trucks. Together, these developments suggest foreign automakers with limited U.S. operations are concerned Trump’s tariff threats could hurt their sales and profits.
BMW, VW and Daimler each assemble some cars in the U.S., but American-made vehicles represent well less than half of their sales here, Barclays says.
Volvo is opening its first U.S. factory, a $1.1 billion plant in Charleston, South Carolina, in a serendipitous stroke that will help insulate the automaker from the tariff threat.
The Chinese-owned Swedish automaker plans to have 1,500 workers at the plant by the end of 2018 and eventually expects to locate about 4,000 jobs there. At full capacity, the 2.3 million-squarefoot Charleston plant will be capable of making 150,000 vehicles per year. Production starts in the fall.
The automaker will initially make the S60 sedan at the facility. In 2021, the plant will begin assembling the XC90 SUV. Once it’s making both models, the plant will ship about half of its vehicles to foreign markets, Samuelsson said.
Samuelsson acknowledged Volvo’s timing was excellent. And he said he’s glad he didn’t locate the plant in Mexico, which could be subject to tariffs if NAFTA talks fail to deliver a tariff-free compromise.
“If we would have no factory here, we would, of course, be even more nervous,” Samuelsson said.
To be sure, Volvo would further benefit from the elimination of tariffs. The company exports cars from Europe and China to the U.S.
Construction on Volvo’s South Carolina plant started in 2015, long before any serious threats of tariffs. But the benefits of making cars in the U.S. already were taking shape when Volvo set its sights on the state. Automakers increasingly are making vehicles in markets where they sell them, allowing them to minimize shipping costs and avoid foreign currency volatility.