At the center of Mercedes’ decision is a simple calculation: building cars closer to its customers will help dodge the rising costs of importing them with the current auto tariffs in place.
Mercedes North America CEO Jason Hoff told Reuters that tariffs were on the company’s mind, saying that investing more in the local market “just makes good business sense” in this environment (2).
Meanwhile, Mercedes-Benz Chairman Ola Källenius made it clear this investment was more than a short-term strategy. As he told AL.com (3), “If you invest in industrial structures like this in the auto industry, you don’t do that for years, you do it for decades.”
Källenius hinted this investment could ramp up production from the 250,000 to 300,000 vehicles the plant currently produces annually to 340,000 vehicles per year.
Mercedes-Benz joins a growing list of foreign automakers that are deciding to double down on their U.S. investments in the wake of Trump’s tariffs, as Honda (4) and Hyundai (5) have also announced massive deals to build more cars in U.S. facilities.
Tariffs take $35B out of the auto industry
According to a recent study from Automotive News, the auto industry is paying big time due to Trump’s tariffs. Using data from the world’s largest automakers, analysts found these car manufacturers have already collectively paid $35 billion in tariff fees (6).
For Mercedes-Benz in particular, tariffs wiped out about $1.2 billion, contributing to a 57% profit plunge, according to CNBC (7). But that’s a comparatively minor hit versus other automakers. For instance, Toyota paid $9.1 billion in the past year due to the U.S. tariffs on auto parts and vehicles (8).
And it doesn’t appear that auto manufacturers will see any relief in the near term. Although the Supreme Court overturned some of Trump’s tariffs on foreign imports, that ruling reportedly didn’t include cars or auto parts (9).
Given these dynamics, it makes sense that more companies like Mercedes-Benz are stepping up their U.S. investments. But what does any of this matter for Americans who may be in the market for a new car?
American built, but still expensive
It makes sense that car models made in U.S. plants should cost less for local buyers. In reality, however, you probably aren’t going to see a significant decrease as long as tariffs are still in place.
