Mercedes will make another model in U.S. to counter tariffs

Calgary Herald

01-05-2025

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(Bloomberg) — Mercedes-Benz Group AG plans to move production of another vehicle to the U.S. as President Donald Trump's tariffs raise costs and threaten to make imported cars uncompetitive.
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The German automaker said in a statement that it will shift assembly of a 'core segment vehicle' to its factory in Tuscaloosa, Alabama, by 2027. Though Mercedes didn't specify which model, its most popular import in that category is the GLC sport utility vehicle, which sold 64,163 units in the US last year.
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The shift suggests that Trump's campaign to bring more manufacturing to the U.S. by imposing new tariffs is having some success, even as rapid-fire policy changes take a toll on financial markets, business planning and the economy. Overall US manufacturing activity shrank in April by the most in five months, according to the Institute for Supply Management's factory gauge.
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Trump earlier this week signed a pair of directives easing the impact of his tariffs on the automotive industry following weeks of lobbying. A basic 25 per cent levy remains in place, and the toll on the industry is growing. General Motors Co. on Thursday cited an exposure of as much as $5 billion, though that would've been far bigger without the latest relief measures.
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Mercedes and Jeep owner Stellantis NV have withdrawn their financial forecasts for this year, citing the duties. Volkswagen AG has left its outlook largely unchanged but warned it isn't yet factoring in the impact of the levies. UK automaker Jaguar Land Rover paused shipments to the US following the introduction of the tariffs.
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Higher Costs
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As the duties upend supply chains and raise costs, some carmakers have said they'll pass those on to buyers.
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Mercedes had said in April that it was considering moving some production due to added costs stemming from the duties. The company is also considering withdrawing its least expensive cars from the US because tariffs will make their sales economically unfeasible, Bloomberg reported last month.
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The Tuscaloosa plant made around 260,000 vehicles in 2024, Mercedes said, including the GLE, GLS, GLE Coupe and Mercedes-Maybach GLS.
The site also makes some vehicles for export from the US, including the EQE SUV, EQS SUV and Mercedes-Maybach EQS SUV for all global markets, the carmaker said.
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Mercedes touted its US presence in the statement, saying it employs more than 11,000 people in the country and works with some 400 suppliers there.
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Markets were closed in Frankfurt on Thursday for a holiday. Mercedes shares have fallen 2.5 per cent so far this year amid investor concern around the effect of tariffs.
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