On Truth Social, Trump announced on Friday that tariffs on EU-made cars would be raised from 15 to 25 percent starting "next week."
According to Trump, the reason is that the EU is "not following agreed trade deals," without specifying further.
The tariff threat is one of many from Trump, and as recently as a couple of months ago, Trump issued a similar warning to South Korea. However, these threats have not yet materialized.
"You never know with Donald Trump. He says this and then it's hard to know. It could be part of another negotiation," Engellau points out about the likelihood of it becoming a reality.
Exceptions should be made
Trump wrote that the tariffs would apply to all car exports to the American market. Exceptions would be made for cars produced in the United States, something that most European manufacturers already do. Volvo Cars, for example, has long had a factory in Charleston, South Carolina, where the SUV model EX90 is manufactured. It is also planned that the company's XC60 model will begin production there.
The problem, however, is that current production accounts for an extremely small portion of total sales in the American market, Engellau points out:
Depending on the economy, they sell around 120,000–125,000 cars in the US and the volumes produced in Charleston are quite small, so at the moment they are quite exposed to tariffs.
Challenging situation
Volvo Cars, which focuses on electric vehicle production, already has a challenging situation in the U.S. market. Since the removal of subsidies for electric car purchases, Volvo Cars' sales have declined. In the first quarter, sales fell 32 percent, or by 22,651 cars.
Volvo has become more exposed to competition and that has been a challenge. To slap on additional tariffs would be quite unpleasant then, says Engellau.
