Mercedes Considers Pulling Entry-Level Cars From US Over Tariffs: Report

Mercedes-Benz Group is considering pulling its cheapest cars from the U.S. ahead of President Donald Trump's auto tariffs, sources told Bloomberg.

A spokesperson for Mercedes-Benz denied the claims on Tuesday in an email to Newsweek, adding "Mercedes-Benz continues to seek sales growth for its highly desirable vehicles."

The Context

Trump is set to impose the 25 percent tariff on auto imports Wednesday, alongside a series of "reciprocal tariffs" on countries around the globe, expected to take effect Thursday.

The newly announced tariffs are designed to boost American auto manufacturing and jobs by financially penalizing imports.

Critics have warned that most cars are made with a combination of domestic and imported parts, meaning that the tariffs would escalate vehicle costs for Americans.

What To Know

Around 15 percent of Mercedes-Benz Group's global vehicle sales were in the United States last year.

The German luxury automaker said Trump's tariffs would dent its profit margin by 2.5 percentage points on a gross basis, without mitigation measures that could include cutting the sales of its entry-level models in the U.S. and offering only its higher-end vehicles, sources told Bloomberg.

Like many automakers, Mercedes-Benz could also raise the price of vehicles to avoid the impact of tariffs.

During an investors call on Monday, executives at the automaker said the company was also building up inventory at wholesale and dealer lots to get ahead of the tariffs, Reuters reports.

What People Are Saying

A Mercedes-Benz Group spokesperson told WVTM 13 News, regarding Trump's tariffs, "As a global company, we rely on constrictive cooperation and policies that promote mutually beneficial trade across international markets."

Trump told NBC News on Saturday, "I couldn't care less if they raise prices [on foreign-made vehicles] because people are going to start buying American cars."

Ursula von der Leyen, president of the European Commission, posted to X, formerly Twitter, on March 26: "I deeply regret the U.S. decision to impose tariffs on EU automotive exports. Tariffs are taxes - bad for businesses, worse for consumers, in the U.S. and the EU. The EU will continue to seek negotiated solutions, while safeguarding its economic interests."

Shawn Fain, president of United Auto Workers, said in a statement: "We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades. Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today's actions."

What Happens Next

The 25 percent tariffs on foreign-made cars begin Wednesday, with duties on auto parts expected before May 3.