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Volvo opens first US factory as Donald Trump's tariff threat looms

The Volvo XC90 will be among cars produced at the Charleston factory
The Volvo XC90 will be among cars produced at the Charleston factory

Volvo has opened its first factory in the US in a move the Swedish car maker says establishes it as a “truly global manufacturer”.

The plant will help insulate the company from the imposition of import tariffs on cars into the US as President Donald Trump increasing talks up the prospect of levies.

Located in Charleston, South Carolina, the factory, which Volvo has invested $1.1bn in, will allow cars rolling off the production line there to be sold in the US without being subject to tariffs.

The US President has threatened to expand tariffs on imports of cars in a move he believes will protect jobs in the US car industry.

Mr Trump has focused on German manufacturers as the target of any levies on cars and he has already imposed tariffs on a wide range of other products from China, as the likelihood of a major trade war between the two nations grows. Volvo is owned by Chinese corporation Geely. 

Volvo's new South Carolina plant
Volvo's new South Carolina plant

Håkan Samuelsson, chief executive of Volvo Cars, said: “The Charleston plant establishes the US as our third home market.”

Work on the 2.3 million sq ft factory started three years ago and by the end of the year it will have 1,500 staff. The company plans to employ 4,000 workers over the next few years.

At full capacity the new plant will be able to produce 150,000 cars a year, and will initially build the S60 mid-size saloon, with a new version of the XC90 large SUV following in three years.

Vehicles coming off the line at Charleston will be sold both in the US and for export.

Expansion in the US - the company’s third-largest market - comes at a critical time for Volvo. Last year the company sold almost 600,000 cars and Mr Samelsson has said the company is on track for its target of 800,000 sales by 2020.

The company eventually plans to reach sales of more than 1m cars a year, which could be helped by the US plant allowing Volvo to avoid tariffs.

Volvo cars sit in the premium segment and their higher price would be disproportionately impacted by levies.