China’s Volvo Cars plant in South Carolina caught in tariff wars

The strategic Chinese move is aimed at hurting Trump’s Republican base since South Carolina is a Republican controlled state. The move also carefully targets U.S. jobs as well as hangs the carrot of potential auto exports from the U.S. to markets overseas.

In a strategic move, China’s Volvo Cars stated U.S. President Donald Trump’s trade tariffs on Chinese goods, could potentially undermine its plan of creating up to 4,000 auto jobs in its new auto factory in South Carolina, a Republican state.

“If you have trade barriers and restrictions, we cannot create as many jobs as we are planning to,” said Hakan Samuelsson, Volvo Cars’ CEO on the sidelines of an event celebrating the new auto plant.

“We want to export and if suddenly China and Europe have very high barriers, it would be impossible,” said Samuelsson. “Then you have to build the cars there. And then all cars will be more expensive, you have to invest more tooling and have every model in every country. That’s against all the logic of modern economies that trade with each other.”

Currently, Volvo Cars, owned by China’s Zhejiang Geely Holding Group, imports all of the vehicles it sells in the U.S. Thanks to rising demand for these imported vehicles the company has decided to expand its investment in South Carolina to $1.1 billion which will see the hiring of around 4,000 works once the the factory comes online.

While the bulk of these imports come from either China or Europe many U.S. built cars are also exported to markets outside of the U.S.

Although Volvo Cars has currently no immediate plans to build another model at the plant, but if a decision is made to build and launch Lynk & Co vehicles in the country, building them in the South Carolina is likely to be an option, said Samuelsson.

The Lynk brand is co-owned by Zhejiang Geely Holding Group Co Ltd, Geely Auto and Volvo.

Although so far Volvo has hired around 900 workers at the plant, it will have to hire 1,500 more as it ramps up production in the fall, said Anders Gustafsson, Volvo’s senior vice president for the Americas. “We need to speed up.”

If Trump acts on his threat of imposing 25% duty on foreign cars and if China were to retaliate against that move, Volvo Cars’ plans are likely to be significantly affected, said Samuelsson.

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Categories: Creativity, Economy & Finance, Entrepreneurship, Geopolitics, HR & Organization, Strategy

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