Mercedes-Benz says it is building up its U.S. inventory in wholesale and dealer lots ahead of a new round of tariffs to be announced today by the Trump White House, according to Reuters.

The German automaker’s executives told analysts it would observe how its competitors responded once tariffs were in place, according to Bernstein Research.

President Donald Trump is expected to announce a new round of tariffs on what he is termed “Liberation Day,” as a way to inspire more manufacturing to locate in the U.S.

Last week, Trump announced 25% tariffs on auto imports, a move the White House claims would foster domestic manufacturing but could hammer automakers in the U.S. with global supply chains.

Mercedes-Benz said the planned 25% tariff on auto imports would likely impact its margin by 2.5 percentage points on a gross basis, before any mitigation.

On Monday, Mercedes shot down reports it was considering withdrawing its cheapest models in the U.S. ahead of the tariffs.

“Mercedes-Benz continues to seek sales growth for its highly desirable vehicles,” a company spokesperson said in an emailed statement.

Bloomberg in an earlier report had said the carmaker was considering withdrawing more entry-level models from sale in U.S. markets.

Industry analysts say tariffs – which are paid by companies to sell goods in the U.S. – will likely drive up prices for consumers and could aggravate markets already reeling from inflationary pressure.