US Tariffs Are Hitting This Luxury Car Brand Hard

Although executives at Germany-based Mercedes-Benz AG Group insist that demand is still high for their luxury vehicles, tariffs in the U.S. caused a slump in sales during the second quarter of 2025. According to the company's July 2025 global sales report, Mercedes-Benz sold 453,700 cars in Q2 2025 (April 1 to June 30), which was 9% fewer than the year before. In the U.S., in particular, just 74,600 cars were sold. Meanwhile, sales for Mercedes-Benz vans fell 10% internationally, and 26% in the U.S. when compared to the year prior.

These poor sales highlight how Mercedes-Benz, along with other latest luxury car makers, are being adversely affected by price increases caused by the Trump administration's 25% tariff. Because automobile manufacturers are expected to pass 80% of the cost of tariffs to consumers, the average price per vehicle will increase by an average of $1,760, consulting firm AlixPartners told Bloomberg. 

Although the tariffs target foreign-made cars, the Trump tariffs are also expected to make some American cars more expensive if they're assembled in other countries, or made with foreign-made parts deemed noncompliant by the United States-Mexico-Canada (USMCA) free trade agreement. Because tariffs will be applied to foreign made parts that don't conform to the USMCA, this may increase the cost of maintaining vehicles. Indeed, prior to Trump's second term, automobile parts retailer AutoZone warned that it would increase prices even before tariffs were implemented.

The purpose of tariffs is two-fold. One is to increase revenue. Trump has repeatedly opined that the nation was never richer than when William McKinley was president and tariffs were the main revenue source for the U.S. However, as Dartmouth economics professor Douglas Irwin explained to CNN, America's growth at that time was largely due to new advances in industry and an influx of cheap immigrant labor — an influx the Trump administration is intent on reversing. The other reason Trump supports car tariffs, and why he wants even more, is to push companies to manufacture cars domestically. According to The White House, manufacturers who build domestically will only be tariffed for non-U.S. content.

Trump made his opinion on car prices clear, telling NBC News that he didn't care if automobile makers increased prices due to tariffs because "people are going to start buying American-made cars." He also stated that the tariff atmosphere had already encourages companies to shift production to the U.S. — including General Motors' plan to invest $4 billion into moving its manufacturing plants from Mexico into the U.S., per TheStreet. 

With that said, Mercedes-Benz does build certain models in the U.S. Since the late 1990s, an affiliate of Mercedes-Benz has been manufacturing vehicles such as the GLS Luxury SUV, the GLE Coup, and the Mercedes-Maybach GLS SUV in a facility in Tuscaloosa County, Alabama.

The U.S. is not the only place where Mercedes-Benz sales are in decline. Q2 2025 figures revealed that sales in China were down 19% for cars and 37% for vans when compared to 2024. A significant reason is that Chinese buyers prefer cars made by Chinese companies, especially electric vehicles. However, U.S. tariffs are also partially to blame thanks to retaliatory tariffs sparked by Trump's trade war — with imports into China (like Mercedes' U.S.-built vehicles) being hit with a 10% tariff, per Bloomberg. 

Nevertheless, Mercedes-Benz sales everywhere else in the world are on an upward swing. According to Q2 2025 figures, outside of Asia and North America, van sales were up 10% while car sales climbed 24%, with most of those sales hikes were in Turkey and South America. And while Mercedes-Benz did point out declining sales, it also stated that U.S. demand for "top-end" vehicles was still very strong in Q2, "leading to a surge in retail deliveries to customers of 15%."

The sales dip also did not put a damper on the company's outward enthusiasm for new products, especially electric vehicles. Mathias Geisen, Member of the Board of Management of Mercedes Benz Group, announced that the company's new CLS electric vehicle, had garnered positive feedback, stating in a company release, "This product marks the beginning of further electric vehicle sales growth ahead of the biggest series of car launches at Mercedes-Benz."