Volvo Fires People as Tariffs Bite

By Douglas A. McIntyre Published Apr 21, 9:10AM EDT

24/7 Wall St. Key Points:

As tariffs raise car prices, the next move by manufacturers is bound to be layoffs.
Volvo just announced job cuts at three U.S. locations.

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Volvo Fires People as Tariffs Bite — © Sjo / iStock Unreleased via Getty Images

American car companies have told Donald Trump that tariffs on cars and car parts will wreck their bottom lines. Ford just told its dealers it will almost certainly raise prices in June to offset the increase in their expenses because of tariffs. Jaguar and Land Rover say they will stop sending cars to the United States. As tariffs raise car prices, the next move for manufacturers is bound to be layoffs. Volvo, which Zhejiang Geely owns, has just announced it will cut 800 jobs at three U.S. locations.

Volvo is not one of the larger luxury car companies with a footprint in the United States. It sold just over 138,000 cars in the United States and Canada last year. Mercedes, Lexus, and BMW are much larger. Volvo has a second U.S. business, heavy-duty trucks, which has been hit hard in the past two weeks.

According to CNN, Volvo announced, “Heavy-duty truck orders continue to be negatively affected by market uncertainty about freight rates and demand, possible regulatory changes, and the impact of tariffs.”

Ford CEO Jim Farley said his company was not immune to the rising costs of tariffs. He commented, “There is no question that tariffs at 25% level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and [an] adverse effect on US jobs, as well as the entire value system in our industry.” American-based car companies face the need for layoffs if their car sales drop due to high prices they have to pass on to consumers.

The administration argues that tariffs will bring back manufacturing jobs to America, and in theory that may be true. However, building new manufacturing facilities to handle extra volume would take years and billions of dollars. The labor cost also needs to be competitive with China and Mexico. That is unlikely, particularly in light of UAW contracts.

If tariffs stay in place, the Volvo layoffs will be part of a much larger trend.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.