Mercedes will be hit hardest by the new US tariffs and face a potential €3.4 billion (USD3.7 billion) blow.

Mercedes-Benz is at a financial and strategic crossroads as sweeping new U.S. tariffs threaten to disrupt its operations, despite years of investment in American manufacturing.

The German automaker has steadily expanded its U.S. footprint, with a key production hub in Tuscaloosa, Alabama, assembling high-demand models like the GLE and GLS SUVs.

However, many essential components, especially engines and transmissions are still imported from Europe, leaving them exposed to new trade penalties.

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.

One of the entry-level models that might be cut will be all-new CLA which comes from the Rastatt plant in Germany.

The Rastatt plant also builds the A and B-Class as well as the compact SUV GLA and the all-electric EQA. With combustion engines, plug-in hybrids and electric vehicles, Rastatt’s compact car production covers the entire range of modern drive technologies.

The CLA models with hybrid drive are produced flexibly on the same line at the Mercedes-Benz plant in Rastatt as their all-electric counterparts. Production is net carbon neutral.

The plant is supplied with 100 percent green electricity, most of which is purchased externally.

Rastatt is the lead plant in the production network for Mercedes-Benz vehicles in this segment, serving as a pioneer of the “Digital First” approach in the company’s global production network.

In preparation for production of the new model, the extensive conversion of an existing assembly hall was virtually represented and commissioned for the first time using a digital twin. The all-new CLA also marks the first series-production applications of the Mercedes-Benz Operating System (MB.OS), the company’s proprietary chip-to-cloud architecture.

Vehicle software is no longer transmitted via various hardware modules but via a central server of the Mercedes-Benz Intelligent Cloud. In addition to the CLA, the A-Class, B-Class, compact GLA SUV and the all-electric Mercedes-Benz EQA are also produced at the site.

After the gradual ramp-up in Rastatt, Beijing Benz Automotive Co., Ltd (BBAC) will build the CLA for the Chinese market. In collaboration with the Hungarian Mercedes-Benz plant in Kecskemét, further models from the new vehicle family will follow after the start of CLA production.