Volvo faces $1B hit from EU-US auto trade row, urges EU to ease duties for reciprocal gains
The US-EU tariffs on each other’s automotive industry have already created a ruckus among the manufacturers, importers, and exporters of the same. A Swedish multinational automotive company like Volvo also could not escape the chaos and thus, appealed to the EU government to cut the tariff on US car imports after facing a loss of nearly USD 1 billion.
Volvo cars CEO Hakan Samuelsson said the European Union should reduce duties on US car imports to get the same treatment from the US, especially when Brussels is working towards a trade agreement with Washington.
He made a statement stating, "I think it's unnecessary, the European car industry does not need to have any protection from American auto builders"
Backed by China's Geely, Volvo stands among the most impacted European automakers by these bilateral tariffs, given that a significant share of its vehicles sold in the American market are imported from Europe. The company faces a 27.5 per cent tariff on European-manufactured cars entering the US, along with an additional 25 per cent tariff on auto parts, steel and aluminium.
President Donald Trump has announced plans to raise tariffs on EU imports to 30 per cent starting August 1, intensifying pressure on the bloc to reach a trade agreement. Before his administration, the US imposed a 2.5 per cent tariff on European-made vehicles. In comparison, the EU maintained a 10 per cent duty on cars imported from the US, a disparity previously labelled as unfair by Samuelsson.
He thinks if Europe indeed upholds free trade, then it should be shown by having a lowered tariff.
Being affected by steep tariffs, the automaker has, however, decided to shift some of its manufacturing setup to the United States. On July 16, Volvo announced that it would begin the production of its XC60 in the US by late 2026, as a strategic move to offset the impact of ongoing tariffs. However, at present, Volvo's South Carolina facility manufactures only the Polestar 3, which has seen limited demand and the Volvo EX90, which has faced challenges in gaining market traction in the US. In response, the company has begun streamlining its product portfolio in the American market.
Samuelsson also stated, "These are the measures we have control over; rather than when it comes to tariffs, we can only have an opinion like everybody else."
In Q2 2025, the company faced a loss of nearly USD 1 billion, mainly because of the previously announced USD 1.2 billion impairment charge pertaining to the model delays and the rising tariff costs. In order to assess the tariff impact, determining the gross margin is the best-suited tariff, which for the company declined to 13.5 per cent from 18.2 per cent in Q1. It was previously calculated to be at 17.7 per cent after adjustment of one-offs.
According to the Bernstein analysts, the firm's result is regarded as "better than feared" since it has been able to sell more emission credits in the second quarter than it did in the first one. Moreover, the analysts suggest the result of the company is a challenging earnings season owing to the decreased demand for electric vehicles but increased competition from the Chinese automakers, creating deep tension.
After the completion of Q2 2025, the auto company is planning to cut down SEK 18 billion (USD 1.71 billion) in its costs to regain the lost margin and to bring the program back on track. The current CEO of the company was brought in with the view to getting a turnaround point by working closely with the Geely group, for which a cost-cutting program was launched. This program highlighted the earnings guidance, slashed nearly 3,000 jobs and slowed down significant investments.
Trump's tariff is said to be affecting not only the Swedish automakers but also other industrial manufacturers. Because of this, a separate company, Truckmaker Volvo AB, on July 17, stated demand in Europe but also indicated a possibility of declining demand in North America, as consumers are still in their "wait-and-see" mode to assess further Trump's move.
Tariff measures have contributed to reduced transport volumes for certain logistics providers, prompting some to pause investments in fleet expansion. However, signs of stabilisation are emerging in Europe, supported by increased defence spending. Recent data revealed that industrial output across the 20-member eurozone rose by 1.7 per cent in June compared to the previous month, surpassing analyst expectations.
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