Apr 3, 2026
Trump’s auto tariffs appear to be turning into treasure for Alabama’s Tuscaloosa County.
At a recent event at the county’s Mercedes-Benz plant, company executives promised a $4 billion investment plan by 2030, Made In Alabama reports (1). The luxury car manufacturer also showed off the new GLE and GLS SUV models that this money will help produce.
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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).
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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?
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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.
As Kelly Blue Book (KBB) notes (10), “No vehicle made at an assembly plant in the United States is 100% made here.” While reinvestment in U.S. plants may have an effect on local employment, it’s unlikely to dramatically change the costs you’ll see for new cars. In fact, it’s quite the contrary: Costs for vehicles are only expected to climb as long as the extra tariff fees are in place.
As of January 2026, KBB found the average price for a new car is $49,191, nearly 2% higher than last year (11). KBB also said the era of paying $20,000 or less for a new car is likely gone forever.
For imported cars, KBB estimates you should prepare for a $5,000 to $8,900 price increase over last year due to tariffs (12). Although U.S.-made cars don’t have these dramatic increases, they’re still up $1,600 to $2,000.
And the used car market isn’t being spared. Used cars hit an average cost of $26,043 per KBB at the end of 2025, up 3% from the prior year (13).
So, even though tariffs are reshaping where vehicles are built, car buyers shouldn’t expect that fact to magically lower costs.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Made In Alabama (1); Reuters (2, 4); AL.com (3); Hyundai News (5); Automotive News (6); CNBC (7); Car and Driver (8); The Car Guide (9); Kelley Blue Book (10, 11, 12, 13).
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Eric Esposito is a freelance contributor on MoneyWise with an interest in financial markets, investing, and trading. In addition to MoneyWise, Eric’s work can be found on financial publications such as WallStreetZen and CoinDesk. When not researching the latest stock market trends, Eric enjoys biking, walking his dog, and spending time with family in Central Florida. Eric holds a BA in English from Quinnipiac University.
