Ford shipped Transit Connect vans as cars, then stripped the seats to dodge a 25% tariff

The BBC's Szu Ping Chan reports that Ford makes its smallest van, the Transit Connect, in Spain and exports tens of thousands to the US each year. A 25% tariff on imported vans and light trucks, nicknamed the chicken tax because it began in 1963 as retaliation for European duties on US poultry, would apply. So Ford fits rear seats and windows to the US-bound vans, which lets them enter as passenger cars at a 2.5% duty, and removes both once they clear customs. The conversion is said to take two and a half hours per vehicle.

US Customs and Border Protection estimated the practice saved Ford $250m since the van debuted in 2002. The article places it within a long history of tariff engineering, starting with a 19th-century case over dyed sugar in which the Supreme Court said importers could change a product to meet a lower rate as long as there was no resort to disguise or artifice. Other examples are Converse soles with fabric strips and wickless wax cylinders imported to avoid anti-dumping duties on candles.

Ford says it is open about the process, while Customs argues it is disguising the vans, citing unpainted rear seat frames, no headrests and cheap fabric covers.

The 2.5% passenger-car duty is a tenth of the 25% van and light-truck tariff.

Classification depends on the item's condition when inspected at the border, not its later use.

Rear seats and windows are cheap to install and remove, so the cost is about 2.5 hours of labour per vehicle.

US case law allows changing a product to reach a lower rate unless it involves disguise or artifice.

Duty rules classify what a product is when inspected, so a reversible design change before the border can legally move it into a cheaper class.

In 2013 US Customs ordered Ford to pay the 25% tariff on all Transit Connect imports. Ford challenged this at the US Court of International Trade and won, and Customs was appealing when the article ran in October 2018. Ford said it would receive a refund of contested amounts plus interest if it prevailed on appeal.