Volvo loses sedans and wagons in the US to Trump's tariffs

18 July 2025

Volvo is making a dramatic change to its American lineup. In a pivot driven by newly implemented international trade policies, the company will stop selling nearly all its sedans and traditional station wagons in the United States starting with the 2026 model year. This will transform Volvo into an almost exclusively SUV-focused brand in one of its most important markets.

The decision comes as a direct response to import tariffs placed on cars brought into the US. The current administration has imposed a steep 27.5% tax on cars coming from Europe and an even more dramatic 100% tariff on electric vehicles shipped from China. For Volvo, which is owned by the Chinese firm Geely, this created a serious financial headache for key models in its portfolio.

As a result, Volvo confirmed it will phase out the Chinese-built S90 sedan and the European-built V60 station wagons. This culling of the lineup is a big shift for a brand that built its reputation on these very types of vehicles. After the changes take effect, the only car that isn't an SUV remaining in Volvo's US showrooms will be the V60 Cross Country, a slightly raised, more rugged version of the standard wagon. It seems the brand once famous for the automotive equivalent of sensible shoes is now almost exclusively in the hiking boot business.

To navigate this new trade landscape, Volvo is betting big on American manufacturing. The company announced it will move the production of its most popular vehicle, the XC60 crossover, to its factory in Ridgeville, South Carolina. Currently, the plant, which builds the all-electric EX90 SUV and its corporate cousin, the Polestar 3, is severely underutilized.

Last year, the facility produced only about 20,000 vehicles, representing 13% of its total manufacturing capacity. By adding its best-selling model to the South Carolina production line, Volvo hopes to dodge the 27.5% European import tariff and finally make full use of its American factory.

Company executives confirmed that US production of the XC60 is scheduled to begin in early 2027. According to Volvo CFO Fredrik Hansson, the cost of adding the XC60 to the plant will be relatively low, described as being in the "very low single-digit billion U.S. Dollars." This is because the factory was previously set up to build the S60 sedan, which shares its basic engineering platform with the XC60.

While Volvo adapts its business to survive the tariffs, its leadership is also speaking out about the broader trade situation. The company recently reported an operating loss of 10 billion Swedish kronor (about £1 billion) for the second quarter of 2025, adding a sense of urgency to its strategic shifts.

CEO Håkan Samuelsson has publicly called for the European Union to lower its own 10% tariff on American-made cars. He argued that the European auto industry is strong enough to compete without any protectionist measures. "If Europe is for free trade, we should be the ones showing the way," Samuelsson said, even as he acknowledged that as a business leader, his influence is limited.

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