Mercedes’ Proposal To Counter US Tariffs Could Be A Winner

Mercedes-Benz is looking to help the US and EU work out a deal that would avoid it paying tariffs on most of its popular cars and SUVs like the GLC-Class. A proposal where tariffs and duties are waived on a car-for-car basis. One in and one out, instead of hefty fees on both vehicles, could help the automaker (and the industry) hammer out a new deal in an increasingly stressful environment.

Benz, along with rivals BMW and the Volkswagen Group, have been in talks with the White House to try and work out a tariff arrangement, Reuters reported last month. Both Benz and BMW, which is the largest US vehicle exporter by value, build vehicles in the US for sale in the US and abroad, as well as importing vehicles to sell in the US.

Benz Could Be A “Sounding Board” For Government Negotiations

While the automaker is involved with the talks, it is not part of the negotiations. As CEO Ola Kallenius told the Frankfurt Allgemeine Zeitung, “negotiations take place at EU level because trade policy falls within the EU’s remit.” It’s not up to car companies to negotiate trade deals; that is something handled at a state level. He added that “we are available as a sounding board, contributing ideas and presenting scenarios showing how certain decisions would affect us.” International trade is complex, and even small changes can have extensive ripple effects on industry and consumers.

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The comments from Kallenius came hours before the first in-person meeting between German Chancellor Friedrich Merz and President Trump. The two were expected to talk trade, as the EU works to avoid facing large tariffs from the US, as well as NATO, and the war in Ukraine. The talks were overshadowed by a social media falling-out between the President and Elon Musk, which took over the news cycle in the afternoon.

Mercedes-Benz Is A Big US Exporter

According to Mercedes-Benz, roughly 60 percent of the vehicles it assembles in Alabama are exported to countries around the world. The plant has built more than 4.5 million SUVs since opening in 1997, with production of roughly 244,000 vehicles last year. Mercedes-Benz says there are 6,000 workers at the plant and 60,000 jobs at suppliers and providers in the region, and that it has more than 8,000 manufacturing jobs in the US among 11,000 direct employees.

While Benz exports roughly 144,000 vehicles per year from the US, it imports around 228,000. But most of those imports are lower-cost models, not the GLE and GLS models and EQE and EQS SUVs it builds in the US. Benz also builds around 50,000 vans at its South Carolina plant each year.

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Vehicles imported from the EU are currently facing a 25 percent tariff. The EU is readying a response with similar tariffs of its own on vehicles imported from the US. The measures could cost automakers, and by direct effect, customers, billions.

Sources: Reuters, Reuters