German Automaker Smartly Shifts Business Plan in Response to Tariffs – Mercedes Will Make More Vehicles in USA

Sundance reporting for CTH 

In a decision to position for long-term tariff avoidance, Mercedes Benz will shift production of their GLC (compact SUV) to Tuscaloosa, Alabama, away from Bremen, Germany.

Previously, the German automaker had shifted manufacturing of large SUV lines to the USA to avoid the pre-existing 25% ‘chicken tax.’  However, the smaller and less expensive crossover types were still made in Germany and shipped to the USA.  As the shipping vessels returned to Germany, they would take some of the SUV inventory back with them.  It was the most cost-effective solution, given the nature of the tariff situation.

Now, with larger import tariffs against all vehicles, Mercedes has shifted their business model to essentially an outcome where all USA marketed/sold vehicles will be manufactured in the USA, and all EU marketed/sold vehicles will be manufactured in Germany.

(Via Daily Mail) – Mercedes-Benz will shift production of one of its vehicles to Tuscaloosa, Alabama by 2027. The German luxury carmaker’s move is the latest response from an industry caught in the expensive crosshairs of President Donald Trump’s 25 percent tariffs.

The decision marks a potential win for Trump’s protectionist trade agenda, which aims to boost US manufacturing by slapping steep tariffs on foreign-made goods. But there are many complicating factors.

The company didn’t say which model would move to America. Instead, it said the production of a ‘core segment vehicle’ will move stateside.

Many experts predict the move will impact the production of the GLC, the company’s best-selling car in the US.

The compact SUV is built in Bremen, Germany.

Mercedes reported selling 64,163 units in the US in 2024, up 58 percent from the year before. (read more)

On the other hand, BMW is still screwed because it made the prior decision to build all their new fancy auto plants in Mexico.

Within the U.S. market, Mercedes Benz now has a strategic advantage over their German rival, BMW.