INGOLSTADT, Germany, March 18 (Reuters) - Volkswagen's

premium Audi brand is weighing whether to pass on

the costs of U.S. import tariffs to customers via price

increases, it said on Tuesday, adding it was expecting a

decision this year on localising production in North America.

Audi has no factory in the United States but is one of the

carmakers most exposed to U.S. import tariffs via its plant in

San Jose Chiapa, Mexico, which makes the popular Q5 and employs

over 5,000 people.

U.S. President Donald Trump earlier this month agreed to

exempt automakers for a month from his punishing 25% tariffs on

Canada and Mexico so long as they complied with existing free

trade rules.

Audi's finance chief Juergen Rittersberger said the company

was considering "the extent to which we will have to pass on at

least some of the tariffs to our customers in the form of price

increases".

Audi CEO Gernot Doellner expects a decision on localising

production in the North American market -- which could include

using existing plants of the Volkswagen group or a new plant --

this year.