Mercedes to invest $4B in Alabama plant driven by tariffs

The state of Alabama has benefitted greatly due to the tarriffs. Eli Lilly announced a multiple billion dollar deal in the Huntsville area a few months ago and now Mercedes in Tuscaloosa

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I thought all of Trump’s tariffs were cancelled by the Supreme Court.

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Why would you have thought that?

It was clear at the time that SCOTUS only overturned the ones based on one specific argument.

Like a cotton gin

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Eli Whitney

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Like a cotton gin
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Eli Whitney

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Hahahahaha I just noticed the mistake. Updated it, thanks

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SFP told me tariffs were a bad thing.

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They are a tax on the American people. If it was being used to replace income tax that would be great. Otherwise, it's just a tax increase.

And it means you'll be paying more for any vehicles you buy since the free market is bypassed and isn't allowed to adjust as it should properly.

What's next, we gonna start focusing on where a thief spends his money to start claiming all the things that are beneficial to someone stealing money? But he gave $5 to a hungry person, it's a good thing!

Seems a lot like the economic broken window fallacy.

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SFP told me tariffs were a bad thing.

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Well, let's do some math and see if he was correct.

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Mercedes-Benz U.S. International (MBUSI) production team members in Alabama typically start at around $20 per hour, with the potential to reach a top rate of $25-$26 per hour within four years...

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Mercedes-Benz production workers in Bremen, Germany, typically earn between €16 and €22 per hour, with some roles averaging around €20 per hour based on 2026 data.

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So since this particular factory was building in Germany and not Mexico or China or somewhere with a much lower hourly labor rate, the labor looks about the same, so moving more of it stateside shouldn't impact the price of the vehicles.

Taking the middle of the salary range it comes out to roughly $45,000 a year. I couldn't find any information on how many more jobs this would add to the Tuscaloosa plant, but feel safe in opining that adding jobs at that salary range for unskilled labor in that locale is a positive. Not the gigantic huge positive that pro-tariff people would have one believe—no one is going to be able to let their wife stay at home while he buys a house and two cars on $45,000 a year—but I would say it is a mild positive for the local community.

But this is far from a typical situation.

Mercedes is near the top price point for luxury cars (I'm not including ultra-luxury like Bentley or Rolls-Royce) in America, so naturally they chose to not increase prices...yet.

Instead they absorbed the $1.2 Billion that tariffs cost them in 2025 and (per the article) moved more operations stateside.

The average factory worker in China makes around $6 an hour and the average factory worker in Mexico makes around $4 an hour.

Relocating production to America from Germany is a wash on labor.

Relocating it from China or Mexico would necessitate raising prices. It wouldn't be able to be avoided.

And the MB salaries for factory workers are higher than usual compared to the American average as well. The average in America is around $17 an hour. Basically entry level wages.

So in this case the result is slightly positive. In the case of relocating from the vast majority of current foreign production sites it would be a negative. The American people (all of them) would pay more for specific items and the only benefit we would get for it would be a few thousand more entry level jobs. Which the labor market isn't filling right now anyway.

Perhaps it is tariff driven, but the German business environment is such that Alabama may look like the "new Mexico" for manufacturing. Even though most of us think corporate taxes are too high, it's probably cheaper to do business there than in most of Western Europe.

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would add to the Tuscaloosa plant,

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Not just there, they are investing $7 billion across the country. $4 billion for the plant.


And then lets extrapolate that to every auto manufacturer.


So Mercedes isn't the only one bringing jobs. I would agree if it were only Mercedes then it isn't enough jobs.

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And then lets extrapolate that to every auto manufacturer.

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But you can't do that. That was my whole point.

Because again, auto workers making parts in other foreign sites don't make anywhere near that much money. If they were previously making cars in China or Mexico, for example, the price of their cars is going up when you shift that labor here. It would have to. You would be talking about as much as a six-fold increase in labor expense.

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I would agree if it were only Mercedes then it isn't enough jobs.

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The point is that you're ignoring what kind of jobs we're talking about.

This one example works because the company is based in Germany and was previously producing cars with German labor, which is comparable to American labor in price.

When you start trying to replace Chinese or Mexican labor with American labor, the math doesn't work.

China and Mexico together are the biggest suppliers of auto parts for US auto makers. Over 52% of car parts used to assemble US cars come from Mexico alone, plus, we're still talking about almost 20% of all US cars still being assembled in Mexico.

You move those manufacturing plants here and there is simply no way for those companies to not have to raise prices. Labor is $4 an hour there vs $20 an hour here.

Mercedes is a complete outlier (which is exactly why they are shifting labor...they are one of the few companies that it makes sense for). This is not something that you're going to see industry-wide. And if you do, you're going to be paying $120,000 for a new Ford F-150 Lariat.