Tariff jitters loom over Volvo's 1st U.S. plant launch

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The new Volvo car factory is the latest of manufacturing giants to take root here.


Sitting on an area of 1,600 acres amid woodlands about one hour away from the port city of Charleston, South Carolina, this factory is the first from the global car brand in the United States.


Started in 2015, this 1.1-billion-U.S.-dollar venture is supposed to be a win for all: The brand would gain stronger footing in the Americas, the local community can expect 4,000 high-paying jobs and a boom for local businesses, and U.S. car consumers can enjoy wider options in terms of models and price.


Early signs for a success story are already budding. Prior to the plant's formal launch ceremony on Wednesday, teams of local workers have already been brought on to management or manufacturing positions at the factory.


According to a group of workers who helped showcase the factory's future products at the launching ceremony, most of them were recruited just months ago, with some still receiving training.


Angela James, a director overseeing material and logistics, told Xinhua that she was happy with Volvo's job because it pays more than most other local jobs.


Being the only bread earner of her family, she said she hopes that her job would be permanent and stable.


However, her hope, along with the bigger prospect of a promising future for the factory, have been put into jeopardy by recent provocative tariffs issued by the U.S. government against the European Union (EU), neighboring Canada and Mexico, and potentially China.


For a plant that relies on free trade to keep the cost of production and sales low, trade barriers can tarnish the plant's ability to garner profits and sustain jobs, Volvo Cars President and CEO Hakan Samuelsson said at the launching ceremony.


"I hope this will not happen because it's really bad for the whole industry," he said.


Javier Varela, Volvo Cars senior vice president of manufacturing and logistics, told Xinhua that about half of the parts used by the Charleston plant comes from overseas suppliers in Europe and Asia, including the engine of the S60 model, which the plant plans to start mass producing as soon as August.


On top of that, half of the cars manufactured here are destined for foreign markets across the globe, Varela said, indicating that low tariffs are crucial to keep the cost in check and help maintain a competitive edge on prices.


"If the tariffs are going to be that high, we cannot bear with this 50 percent export and we will produce less," he said.


Xinhua has learned that to avoid the potentially crippling effect of tariffs, the Charleston plant has plans to increase the percentage of parts that are supplied by local businesses, from the current level of 50 percent to about 70 percent, but the process is complicated, and would take time and additional investment.


Samuelsson said he is "very concerned" over the poisonous atmosphere around global trade at the moment. The United States has slapped tariffs on steel and aluminum from the EU, Mexico and Canada on June 1, and the EU has promised retaliatory tariffs that are scheduled to take effect Friday.


"We have about 4,000 jobs at this factory, half of them would work with export. Depending how this would hurt export, it's up to 2,000 jobs that would be in danger," Samuelsson said.


Speaking at the launching ceremony, Swedish Ambassador to the United States Karin Olofsdotter also voiced her frustration against Washington, saying European aluminum and steel are "not hurting" U.S. industries, and that both sides should resolve their differences in a "good manner."


"If this continues, mutual trust would diminish a little," she said.


Samuelsson agreed, adding that "It's in all's interest, China, Europe and the United States, to have open trade and low barriers."

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