*

Tariffs could cost automakers $110 million daily, $40

billion

annually, analysts say

*

Suppliers adding 'tariff fee' to invoices, potentially

affecting

automakers and consumers

*

GM's production heavily reliant on Mexico, Canada;

shifting

entirely to US challenging

By Kalea Hall, Nora Eckert and Victoria Waldersee

Feb 4 (Reuters) - Donald Trump is keeping some of the

world's biggest automakers guessing whether the U.S. president

will follow through on threats to slap their vehicles and supply

chains with import taxes that could cause hefty vehicle-price

spikes for U.S. consumers.

Trump reiterated on the weekend he would impose 25% tariffs

this week on goods from Mexico and Canada - including on

vehicles made by General Motors ( GM ) and Volkswagen

- but delayed a decision for a month after

discussions with each country's leader.

Such tariffs would cause "dramatic and immediate" financial

fallout for U.S. automakers and other companies manufacturing

vehicles in Mexico and Canada to sell in the U.S., said Sam

Fiorani, vice president at research firm AutoForecast Solutions.

The uncertainty over Trump's threat has left the industry

largely unable to take substantive action to mitigate potential

damage, lest the regulatory landscape change with the

president's next social media post.

"Do you want to invest in a U.S. production line for a

policy that might be reversed in four years' time - or maybe

even tomorrow?" said Andy Palmer, CEO of consultancy Palmer

Automotive.

SUPPLIERS ADDING 'TARIFF FEE'

It is hard to overstate the stakes for automakers serving the

U.S. market. In the near term, Trump's import taxes could cost

the industry $110 million in added costs each day and

potentially $40 billion for the year without major production

shifts, according to Bernstein analysts.

The Detroit Three are among the most exposed. Stellantis ( STLA )

makes 39% of its North American vehicles in Mexico or

Canada, while GM makes 36% there and Ford Motor ( F ) makes 18%,

according to a November report from Barclays. The vast majority

of those vehicles are destined for the United States.

VW produces about three-fourths of its North American fleet

in Mexico, Barclays said, including some of its most popular and

affordable vehicles such as the Jetta, Tiguan and Taos.

U.S.-built vehicles are loaded with Mexican and Canadian

parts that would also be taxed, the bank noted. It estimated

that Mexico provides up to 40% of the parts in U.S. vehicles and

Canada provides more than 20%.

Some suppliers have already added a "tariff fee" on the

invoice to automakers in preparation for the policy shift, said

Dan Hearsch, an auto industry analyst with AlixPartners.

Germany's ZF, a major supplier with 13 Mexico sites making

everything from suspensions to brakes and steering wheels, said

it was discussing with automakers how to absorb tariff costs and

expected that car buyers would share the pain.

"No company in the supply chain can afford to absorb these

cost increases," a ZF spokesperson said.

Trump threatened tariffs to pressure Canada and Mexico to curb

illegal migration and fentanyl across U.S. borders, and has said

he wants to address the country's trade deficits.

GM TRUCKS IN THE CROSSHAIRS

GM's pickup production is a study in the economic

interdependence of the three countries, which has developed for

decades under free trade deals - most recently Trump's

U.S.-Mexico-Canada Agreement that took effect in 2020.

Chevrolet Silverado and GMC Sierra pickups are built at four

plants, including two U.S. factories, one in Silao, Mexico and

another in Oshawa, Canada. The Mexican and Canadian plants

together produced more than half of the nearly 900,000 pickups

GM sold last year in the U.S, according to production data from

AutoForecast Solutions.

In a Monday memo viewed by Reuters, GM assured employees that

plants are maintaining regular production schedules and the

company has appropriate inventory levels.

Even when they are assembled in the U.S., GM trucks rely

heavily on parts from Canada and Mexico.

Engines built at a GM plant in Tonawanda, New York, contain

some imported parts. Some transmissions are made in Canada,

along with truck frames. Wire harnesses connecting electric

components are made in Mexico.

GM executives have said they can shift some pickup production to

the U.S. but the automaker does not have nearly enough capacity

to shift all of it there from Canada and Mexico. Rich

LeTourneau, shop chairman of a union chapter representing

employees at an Indiana GM plant that builds Silverado and

Sierra trucks, said his members make about 50 trucks an hour and

could potentially increase that rate to 74.

"I'm confident they're going to come to me sooner or later

to increase line speed and volume here," he said before the

tariffs were paused on Monday.