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European countries have imposed steep tariffs on American cars for decades, even as their automakers were able to export to the U.S. with no extra duties. But over the last year, the situation has reversed. Now it’s American cars that can enter Europe without substantial barriers, while European automakers face 15% tariffs. Most European CEOs are apoplectic at the reversal. But not Håkan Samuelsson, CEO of Volvo.

“The U.S. and Europe are rather similar, and now the tariffs are okay,” Samuellson told reporters at the launch of the Volvo EX60 in January. “In one way, American cars to Europe, they are better than before. Zero tariffs. European cars to America is worse than before. It’s now 15%. So now they’ve sort of changed roles. ‘You charge us for 40 years now we will charge you.’ So I’m not so upset, maybe, at least till they start to talk about more.” 

It’s a brave position for Volvo specifically, which has been battered by tariffs. The company’s stock had its worst trading day ever last week, as investors reacted to a 68% drop in yearly profit, attributed to reworked EV plans, competition in China and, yes, tariffs. 

The company has been scrambling to re-orient its supply chain to live in the new automotive landscape> Part of that concerns its factory outside of Charleston, North Carolina, which originally focused on producing the S60 sedan. Neither a commercial success nor a fit for our crossover-heavy market, the S60 was an odd choice, and couldn’t keep the plant busy enough on its own.

The plan was that the all-electric EX90 and related Polestar 3 would use up the slack capacity. But the EX90 rollout was a disaster, and EV demand in the U.S. remains lower than experts predicted. So now the company is bringing production of its bread-and-butter gas crossover, the XC60, to the U.S. 

“Our strategy was and is build where you sell. So that’s really key for us, and especially for the U.S.,” Volvo Chief Strategy Officer Michael Fleiss told reporters at the same event. 

That’s a good one-line strategy. Yet it leaves unsaid a particular challenge for Volvo, which is smaller than competitors. Popular products like the XC60 are big sellers in multiple markets, and duplicative production doesn’t make a ton of sense. Meanwhile the all-electric EX60 will be built in Sweden, both because the company wants its most important EV ever to be built close to headquarters, and because it’s expected to be most popular in Europe. 

But that means Americans—already less open to EVs to begin with—are also going to have to pay more for it. If not, Volvo’s going to have to eat that cost, putting pressure on its margins. Shifting everything here isn’t the solution, either. Even if its Charleston plant can export to Europe tariff-free, that plant is not currently equipped for mega-casting, the key production process driving down the price of the EX60. And it represents a small fraction of Volvo’s global manufacturing footprint.

Each of these decisions is a trade-off, and there are no easy answers. The test is certainly harder for smaller brands, too. While a company like Toyota may be able to justify having multiple plants in Europe, Japan, the U.S. and elsewhere, that’s not something Volvo can pull off alone.  

Already, though, we can see that it’s not alone. Its parent company, Geely, has a large production base in China, and has shown flexibility in navigating the new tariff environment. Polestar 3 production moved from China to the U.S. to make that product viable here. The Polestar 4 is built at a former Renault plant in South Korea. And Volvo itself was able to bring EX30 production to Europe to dodge the 100% tariff on Chinese EVs imported to the U.S., even if it lost its affordable price tag in the process.

It’s a volatile and confusing game. But, at least according to Samuelsson, Volvo isn’t afraid to play it. Let’s see if it can win.

Contact the author: Mack.Hogan@insideevs.com.