Volvo Cars’ new sedan model, the ES90, is manufactured in Chengdu, China, placing it at the center of the ongoing trade conflict between the United States and China.
The launch of the ES90 coincides with former U.S. President Donald Trump intensifying his stance on trade tariffs, including new measures against Canada and Mexico, as well as increased punitive tariffs on China. Since the model is produced in China, it will be subject to import tariffs when entering the European and U.S. markets.
– We will have to see where the tariffs land. Tariffs on Canada and Mexico have fluctuated over time, and it may be a mix of facts and negotiation tactics. It is something we need to navigate, says Volvo Cars’ Chief Financial Officer Johan Ekdahl.
One alternative for Volvo Cars could be to move part of the production to its plant in Charleston, South Carolina, to bypass U.S. tariffs. However, Ekdahl also emphasizes that China, the world’s largest car market, remains crucial for the company.
– It is an important model in China, where we have a strong position in the sedan market. Additionally, there are other markets in Asia as well as the UK where no tariffs apply, he says.
Despite the uncertainty surrounding tariffs, the stock market reacted positively. Volvo Cars’ stock rose by 3 percent on the Stockholm Stock Exchange on Wednesday.
