Tariffs Could Force Mercedes to Build C- or E-Class in the US

The automaker would built the vehicle at its Alabama factory.

Photo by: Mercedes-Benz

By: Anthony Alaniz

Feb 20, 2025 at 11:13am ET

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US President Donald Trump is ready to impose a 25-percent tariff on all imported cars, and automakers are preparing for the worst. The tax poses a difficult challenge for foreign car companies that want access to the American market while remaining competitive on price. For Mercedes-Benz, that means it could localize C- or E-Class production in the United States.

Mercedes CEO Ola Kallenius said during the company’s capital markets day that the automaker wants to “grow in the US,” according to Automotive News. The company will build either the C-Class or E-Class at its Tuscaloosa, Alabama factory where it assembles the GLE, GLS, EQE SUV, and EQS SUV.

The move would help Mercedes achieve its goal of localizing 70 percent of production in 2027. The company would like the factory to produce 200,000 cars a year for the US, and the German automaker isn’t alone in reevaluating where it builds its vehicles.

Late last month, before Trump said he would levy a tariff on all imported cars, a report alleged that Porsche and Audi were considering moving some production to America. However, the story failed to provide specific details about the potential models or a timeline for when that could happen. The report did allege that Audi could build its cars at Scout’s new factory, which is under construction in South Carolina.

Domestic Automakers Would Also Be Impacted

Tariffs wouldn't just hurt foreign automakers.

General Motors CFO Paul Jacobson said during an investor conference this week that long-term tariffs could force the automaker to evaluate where it builds certain products, according to another AN report. However, he added, “Those are questions that just don’t have an answer today.”

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Ford CEO Jim Farley said earlier this month tariffs "would have a huge impact on our industry," adding that "billions of dollars of industry profit wiped out." We went on to say, definitively, that tariffs would mean higher prices for consumers.

Trump said he could impose his 25-percent tariff as soon as April 2. The president has already issued and paused a tax on imported goods from Canada and Mexico that included cars, adding to the uncertainty.