When Volvo announced that it would offer the EX30 electric SUV for just $34,950, it sounded too good to be true. It was, but not for any reason Volvo could have foreseen.
In between announcing the compelling price for the Volvo EX30 and today, the U.S. has imposed two heavy tariffs on imported vehicles. The first was a 100% tariff on made-in-China EVs, which scrapped the original plan to sell China-built EX30s here. Then the company spent a bunch of money ramping up production in Belgium to satisfy the U.S. market and a China-wary Europe, only for American tariffs to derail things once again.
The new 25% blanket tariff on imported vehicles means that the EX30 will already be getting more expensive. If Trump increases tariffs on EU goods to 50%, as he threatened today, the economics will become unworkable, Volvo’s CEO said. And he isn’t mincing words.
Bringing Belgian-built EX30s to the U.S. would “of course be almost impossible,” Volvo boss Hakan Samuelsson told Reuters. He added that the tariff costs will have to be passed on to consumers, as they almost always are.
Auto companies don’t have 25% margins—6% tends to be considered “good” in this business—and they certainly aren’t clearing 50% in profit. So they’ll either stop importing cars—reducing competition and therefore driving up prices—or raise prices themselves.
This is pretty untenable for European automakers, and even American firms aren’t happy. It’s hard to imagine the EU standing by while one of its main industries crumbles, which is why Samuelsson doesn’t think these tariffs will last.
“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,” Samuelsson said.
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While there are arguments for incentivizing domestic production, a major shock to the market like this is bound to drastically drive up prices in the short term. A more thoughtful, clear path toward a more made-in-America future could be possible, but asking automakers to relocate factories on a whim is dangerous. At a time when legacy automakers are already behind Chinese firms, weakening European, Japanese, South Korean and American automakers with costly tariffs threatens to push China further into the lead.
Volvo is owned by China’s Geely Holding Group, one of that country’s powerhouses, so I don’t think it will run out of money anytime soon. Still, for Americans who want an affordable EV, tariffs may soon cost them another good option.
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