Volvo chief executive Hakkan Samuelsson has expressed his displeasure with the foreign car tariffs that President Donald Trump could impose.
Speaking during the opening of a Volvo plant in South Carolina, Samuelsson said a company like Volvo must stand up for free trade. He says a 25 per cent tariff on imported cars to the U.S. will hurt the country’s economy, not help it, The Independent reports.
“If we go back to the 19th century when everyone wanted to protect their own market that is definitely not good for the wealth of nations. That would really be bad – not just for Volvo,” he said.
“Cars would be more expensive. We’d probably sell fewer cars – and that would generate less growth in the economy. The whole growth in the economy in the last 100 years has been based on comparative advantage. If we stop doing that – that’s not smart.”
Samuelsson isn’t alone in this belief. In fact, almost every economist you ask will tell you that protectionism hurts an economy and doesn’t create the prosperity promised by Trump.
Volvo’s South Carolina facility will be the sole manufacturer of the new S60 sedan and is tipped to build the next-generation XC90 too. Half of the S60s produced here will be for the U.S. while the remaining cars will be exported.
“This factory is a good example of free trade. We want to build cars for America, but we also want to build cars for export. I think what we are demonstrating here is how we can prosper from free trade.”
Tariffs on imported vehicles would harm Volvo significantly. Last year, all of the 82,000 vehicles it sold in the U.S. were imported and even when production in South Carolina commences, it will still only account for 10 per cent of local sales.