Sweden’s Volvo Cars shakes up plans in the U.S. as tariffs bite

Volvo Cars is widely considered to be one of the most exposed European carmakers to U.S. tariffs.

🇺🇸 What’s happening: Tariffs forcing changes in the U.S.

• Volvo is highly exposed to U.S. auto tariffs: The automaker imports most of its hybrid and electric models from Europe, and is hit with a 27.5% tariff on EU-made cars and 100% on EVs from China. These levies are squeezing margins and raising costs significantly. Omni Ekonomi+15CNBC+15World Auto Forum+15

• As a result, Volvo took a SEK 11.4 billion (~$1.17 billion) impairment charge in Q2 2025 tied to tariffs and launch delays (notably the ES90 and EX90), and reported sharply lower operating profits and reduced volume expectations. New York Post+2Reuters+2Investing.com+2

🏭 Strategic shifts: Localizing production and reshaping lineup

• To mitigate trade exposure, Volvo will start producing its best‑selling XC60 SUV at its Charleston, South Carolina plant, with production beginning in late 2026 / early 2027. New York Post+6Reuters+6The Wall Street Journal+6

• The existing facility already manufactures the all-electric EX90 and Polestar 3, but utilization has been low. Bringing XC60 production online is expected to significantly increase output and efficiency. TradingView+15Yahoo Autos+15E24+15

• Volvo is progressively cutting U.S. offerings: sedans (e.g., S60) and wagons (e.g., V60) are being phased out of the portfolio to focus on SUVs better suited to demand and production localization. Reddit+15Yahoo Autos+15The Sun+15

📉 Internal restructuring and cost controls

• In early 2025, Volvo launched an SEK 18 billion (~$1.9 billion) cost reduction plan, including restructuring of U.S. operations, organizational cuts (notably ~15% of white-collar jobs), and withdrawal of forward earnings guidance. world-energy.org+3World Auto Forum+3Investing.com+3

• A new Americas region (covering U.S., Canada and Latin America) has been established to give regional autonomy and tailor decisions to market needs. world-energy.org

🌍 Trade policy views: Volvo’s voice on tariffs

• CEO Håkan Samuelsson has urged the EU to cut its 10% tariffs on American-made vehicles, calling them “absolutely unnecessary” and urging reciprocal free trade. He warned that U.S. tariffs threaten the business, and that if Europe supports trade openness, it should lead by example. Electrek+10Omni Ekonomi+10New York Post+10

• Volvo has also acknowledged a shift toward regionalization over globalization, adjusting product development and supply chains to fit fragmented trade realities. euronewsInvesting.com

📊 Impact & implications at a glance

✅ What’s next?

• XC60 production launch in South Carolina by late 2026 / early 2027 is a pivotal move—watch for ramp speed and plant utilization updates.

• The broader execution of Volvo’s cost and restructuring plan through 2026 will shape future margins.

• Further actions from regulators or government regarding tariff rates/negotiations could materially impact Volvo’s U.S. strategy.

Bottom line

Faced with sharply higher tariffs on imported vehicles, Volvo Cars is pivoting aggressively—localizing manufacturing in the U.S., shrinking unprofitable models, restructuring global operations, and advocating for freer trade. This represents a major pivot in its strategy, aiming to stabilize margins and sustain U.S. sales by leaning into regional strengths.

Let me know if you’d like deeper insight into their production pipeline, cost plan, or updated EV model strategy.