Mercedes Navigates Trade Tensions Amidst Shifting Markets
Despite robust demand for high-end vehicles in the U.S. and progress in electrification, **Mercedes-Benz** faces headwinds from global trade policies, impacting sales and strategic decisions worldwide.
High-End Demand Soars in the U.S.
**Mercedes-Benz** experienced a global sales dip of 9% in the second quarter of 2025, despite a surge in demand for its luxury vehicles, particularly in America. Sales of top-tier models, including AMG versions and the iconic G-Class, jumped 26% compared to last year.
The company attributed the overall sales decline to the impact of “new global tariff policy,”
leading to slowed supplies to maintain leaner distributor inventories, especially in the U.S. and China. This is widely seen as a reference to the protectionist trade measures championed by **Donald Trump**.
U.S. Market a Bright Spot
The United States has become the second-largest market globally for **Mercedes-Benz**. In America, high-end vehicles comprised over 14% of total Q2 sales, with AMG supplies increasing by 19% and G-Class sales skyrocketing by 56%.
Adam Chamberlain, the new CEO of **Mercedes-Benz** USA, expressed optimism, stating, “We will unlock the potential of this important market,”
while emphasizing distributor partnerships and a focus on plug-in hybrids.
China’s Competitive Landscape
While claiming to maintain its position as China’s leading luxury brand, **Mercedes** acknowledged the market’s intense competition, alluding to a price war with **Tesla** and domestic giants like **BYD**. Moreover, China’s “buy Chinese” policy increasingly pressures imported brands.
Electrification: A Mixed Bag
Global sales of xEVs—battery-electric and plug-in hybrid vehicles—increased to 21% overall and 40% in Europe. Specifically, plug-in hybrid (PHEV) sales increased by 34% in the last quarter. However, the company’s performance in fully battery-electric vehicles seemingly lagged.
Yet, there is some good news. The new CLA, an all-electric sedan, has been well-received in Europe. Furthermore, **Mercedes** has teased the upcoming electric GLC model, part of what it describes as the company’s “biggest car launch series”
slated for the latter half of 2025.
Navigating Political Uncertainty
As demand fluctuates and new models emerge, **Mercedes** must also navigate political complexities. Protectionist policies are forcing foreign carmakers to reassess their sales, distribution, and logistics strategies. In June 2024, the U.S. Congressional Budget Office projected that tariffs would reduce U.S. gross domestic product by 0.1% in 2025. (CBO)
**Mercedes-Benz**’s recent performance underscores a growing reality: political factors are increasingly shaping the global automotive industry.
