Camila Domonoske / NPR
Volvo is a Chinese-owned Swedish company that makes cars in the US When it decided to set up a factory in South Carolina to build cars to ship around the world, it followed a long tradition.
With its port, Charleston, S.C., has been a shipping hub for centuries. And the state has been home to international manufacturers for decades – BMW, Michelin and Bosch are among the many global companies with a foothold here.
But before the facility opened last year, President Trump transformed America's approach to trade policy.
Trump's trade war with China has stretched for more than a year, and trade tensions remain high with Europe too. Tariffs on steel and aluminum are pinhe auto suppliers in the United States, which face higher costs for raw materials to make parts. In the meantime, tariffs on imported parts can cut into the budget of car manufacturers, relying on thousands of different components from around the world to build each vehicle.
Volvo, owned by the Chinese firm Geely, intended to export many cars from the plant near Charleston to China, but tit-forward tariffs between Beijing and Washington threw a wrench into the fine-tuned plans. The US team Volvo is not sent to China.
"It's a little disappointed, but we're going to work through it," says Trey Yonce, a factory supervisor, looking at line workers gathering cars. "It wasn't what we wanted to hear."
But as Yonce notes, Volvo adjusts, not cutting back.
Analysts compare impressive rates to squeeze a balloon. Put pressure on one place and the global economy will shift to work.
Camila Domonoske / NPR
Volvo's new $ 1.1 billion in Ridgeville, S.C. employs 1,500 people. It is currently running at a fraction of its capacity, which produces the S60, a luxurious sedan. But Volvo has probably not stopped production because of the tariffs. In fact, the company plans to add an SUV to the plant over the next few years.
And half of the cars made at the facility are still being exported – just not to China. A batch recently went to Belgium for distribution across Europe. In the coming months, Volvo says it will send cars to countries in the Middle East, Africa, Oceania and Asia Pacific outside of China.
The plant was designed to be flexible, handle gas engines, hybrids and finally electric vehicles on the same line. Volvo must be flexible about where it builds cars and which markets too.
"We must be able to change our production characteristics very quickly," says Anders Gustafsson, Volvo Cars & # 39; vice president of America and CEO of Volvo Car USA. "We is fast, but it's not easy. "
But he takes a long time.
" Running a plant or running a company is a long-term decision, Gustafsson says. "So you lose and you win."
Throughout the industry, automakers are stuck and waiting to see how trade conflicts will break out, says work and production expert Kristin Dziczek from the Center for Automotive Research.
"Significant investment is being made," she says. "Strategic investments are waiting to figure out what the rules of the game [are] should be."
And it is not just the automotive industry that interferes with the unpredictability of these trade negotiations.
"I think every industry has some skin in the game or some things that get destroyed when trading becomes uncertain," she says.
Jim Newsome, CEO of the South Carolina Ports Authority, notes that his state is dependent on global trade. "We should try to lower tariffs, not raise tariffs," he says. "The global automotive industry can benefit from zero tariffs."