Volvo Slashing U.S. Line-Up By Half as Tariffs Crush its Bottom Line

Volvo will trim its U.S. line-up as it copes with the challenges posed by Pres. Donald Trump’s import auto tariffs. Among the models going away: the S60, S90 and ES90 sedans. More from Headlight.News.

Automakers are scrambling to cope with Pres. Donald Trump’s auto import tariffs which can add thousands to the sticker price of a typical vehicle.

In Volvo’s case, that means the automaker is dropping some foreign-made products that it doesn’t think can remain competitive if saddled with the higher costs created by the increased import duties. All told, only half of its current line-up will remain available to U.S. buyers.

The automaker last week said it would abandon plans to sell the new, all-electric ES90 in the U.S. and has since put several other models on the chopping block, according to a report by Reuters.

A $1 billion hit

The Swedish automaker – which is owned by China’s Zhejiang Geely – has been hard hit by the tariffs since the U.S. is one of its key global markets. It last week revealed it was taking a $1.2 billion “impairment” charge for the second quarter related to changes being made in the launch plans for the all-electric ES90 sedan and EX90 crossover.

“The charge primarily reflects adjustments in expected volumes and planned lifecycle profitability associated with the platform for the EX90 and ES90 cars,” the company said. Profitability will be hit by several factors, analysts said, noting not only the higher tariff on Volvos shipped to the U.S. but steps taken by the Trump administration expected to reduce overall demand for EVs.

Volvo is by no means the only automaker hit by tariff-related costs. Both General Motors and Stellantis announced significant declines in earnings and revenues this week, each pointing to the impact of the Trump trade war.

What’s going away

Volvo produces a number of products through a global network of factories in Europe, China and the U.S. But the imports are facing a high burden due to 27.5% tariffs on European-made models, 100% on those from China. For the XC60, Volvo’s most popular product line, the tariffs add at least $10,000 in costs, the duties based on transfer prices rather than the SUV’s base MSRP of $48,345/

That is leading Volvo to cut “around half of its 13-model global line-up in the U.S. market,” reported Reuters.

All of the company’s sedans, including the S60, S90 and ES90, will go away, leaving only the V60 wagon and the carmaker’s SUV line-up available in U.S. showrooms, once the phase-out is completed.

More Tariff News

• Japanese Auto Imports Face 15% Tariffs Under New U.S.- Japan Trade Deal
• GM Net Income Crashes Under Weight of Tariffs
• Stellantis Plunges Deep into the Red; Blames Tariffs for Big Hit

Expanding U.S. production

Like a number of competitors, Volvo is looking for ways to sidestep tariffs – among other things, hoping for more trade deals like the one the U.S. reached with Japan on July 23, cutting tariffs to 15%.

One key step will see the automaker to add production of the popular XC60 to its sole U.S. assembly plant outside Charleston, South Carolina late next year. The factory already produces the EX90 EV.

“Adding the XC60 to our Charleston production line will further strengthen its position and attractiveness in the competitive U.S. market, while supporting and creating American manufacturing jobs,” Håkan Samuelsson, CEO of Volvo Cars, said in a news release. “It is also in line with our ambition to build where we sell and reinforces our long-term commitment to the U.S. market, where we are celebrating our 70th anniversary and have sold over 5 million cars.”