2011 Ford Transit Connect XLT
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  • 2011 Ford Transit Connect XLT front 3/4 view

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Ford is in a bit of a pickle for importing and selling Turkey-built Transit Connect cargo vans as passenger vehicles in the US, then converting them to commercial-vehicle specification stateside in an effort to bypass a 25-percent tax imposed on vehicles imported for commercial use. Automakers are required to pay a 2.5-percent tax on imported passenger vehicles.

The Blue Oval got into trouble for this in a January ruling in which U.S. Customs and Border Protection officials asked Ford to stop the practice of importing the Transit Connect vehicles with passenger seats, then removing and shredding them. Now Automotive News reports that Ford is appealing the ruling. The 25-percent "Chicken Tax," as the tariff is often called, is 50 years old and was enacted as a response to a German tariff on chickens.

Like Ford, Mercede-Benz bypasses the higher tariff, but it does so in a different manner. According to Mercedes Product and Technology Communications Manager Christian Bokich, it partially disassembles Sprinter cargo vans before shipping them to the US, which includes removing the front axle, the engine (which is stamped with the vehicle identification number (VIN) and shipped separately) and "other pieces," then rebuilds them at a plant in South Carolina.

But the ruling against Ford's strategy states that it "serves no manufacturing or commercial purpose" and is there to "manipulate the tariff schedule," Automotive News reports. As Ford's appeal goes through, it is importing the Transit Connect and paying the higher tax, hoping for a favorable outcome and planning to build the next-generation Transit Connect, which it plans to launch before the end of the year, in Spain.

At the same time, Ford is lobbying the government to keep Japanese automakers paying the 25-percent tax on commercial vehicles, but that's because other non-tariff economic barriers make it extremely difficult to import vehicles to Japan.

UPDATE: An earlier version of this article incorrectly stated: "Like Ford, Chrysler bypasses the higher tariff, but it does so in a different manner. It partially disassembles Sprinter cargo vans before shipping them to the US, then rebuilds them at a plant in South Carolina." Though Chrysler previously engaged in this practice when it was part of DaimlerChrysler, the Fiat-owned automaker no longer sells Sprinter cargo vans. The text has since been corrected.


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    • 1 Second Ago
  • 67 Comments
      Drakkon
      • 1 Year Ago
      Yes, clearly the problem is Ford. Not the stupid-assed chicken tax itself. This stems from the same period and obeys the same mindless inertia of the Cuba embargo. We 'liberated' more countries with McDonalds and Pepsi than sanctions. If they want our chickens, they'll buy them. If we want their trucks...
      rstonnerdd
      • 1 Year Ago
      IRS Rules: follow them to the letter unless you legally figure out a way around them. If you do get around the rules, then be prepared for the wrath of the Government. Sounds a little like NASCAR rules during the 50's and 60's . . . .
        brandon
        • 1 Year Ago
        @rstonnerdd
        "Sounds a little like NASCAR rules........" FIFY.
      WHO
      • 1 Year Ago
      LOL, Just downvoting my challenge. MAN UP Tweaker and BibDBo.
      Black Dyanmite
      • 1 Year Ago
      What's important is just like the Fiesta, Fusion, and Focus, Ford has no intention of building it America. And isn't that the point? BD
        JohnTaurus
        • 1 Year Ago
        @Black Dyanmite
        Stupid. Ford builds the Focus in the US (Wayne, MI), and is about to start production of the Fusion in the US (Flat Rock, MI). Get your facts straight before you spout off.
        merlot066
        • 1 Year Ago
        @Black Dyanmite
        The Focus has been built in America for years. About 1/3 of Fusion production has moved to Michigan. Ford has no intention of moving Fiesta production to America as long as Hyundai continues building the Accent in South Korea, Toyota building the Yaris in France, and Honda building the Fit in Japan. Good work as usual.
          axiomatik
          • 1 Year Ago
          @merlot066
          Honda is moving (or maybe already has moved) Fit production to Mexico.
      Ducman69
      • 1 Year Ago
      Sad that American manufacturers have to go to such great lengths to avoid dealing with the UAW. If they were union free, they could build cost effectively right here in the US just like Honda. =/
        Jamie Elmhirst
        • 1 Year Ago
        @Ducman69
        Right. No unions in Europe.
        Dean Hammond
        • 1 Year Ago
        @Ducman69
        not sure that was the rreasoning Ducman, the TC has been manyfactured in Europe for a LONG time, Ford didnt want to spend Millions and millions on preparing a plant here, especially on an \"experiment\" like the TC...well the cars been a resounding sucess so now things may change, manufacture moves to Spain and eventually there may be some plants here....all depends on $$$$ and the TC was quite a risk, so why spend what wasnt necessary to gauge its potential...
          Ducman69
          • 1 Year Ago
          @Dean Hammond
          Look at that plant for example, I just don't think they could build that here in the US, as the UAW would give too much resistance. Heck, remember the investigative report that found them drinking alcohol and smoking weed on the job? http://www.youtube.com/watch?v=TQcEMA08R3Q
          icemilkcoffee
          • 1 Year Ago
          @Dean Hammond
          Fords canadian plants are unionized with the CAW.
      Mike
      • 1 Year Ago
      Huh. And everyone told me that Ford is the sheet. Is this one of the reasons they didn't need a "handout"?
      Black Dyanmite
      • 1 Year Ago
      Everyday Ford's hustlin'! BD
      Jason Krumvieda
      • 1 Year Ago
      No to bring current events into this, but if removing a 50 year old tax that hurts automakers is almost impossible because of a giant bureaucracy then imagine how tough it will be to get rid of Obamacare that is already 1 trillion over budget and hasn't launched yet.
        johnb
        • 1 Year Ago
        @Jason Krumvieda
        ocare is the biggest mistake this country has made in 50 years, but we won't go there. :)
          Jake
          • 1 Year Ago
          @johnb
          I don't know, it's in tough competition with the traitorous organization called the NSA.
        The Other Bob
        • 1 Year Ago
        @Jason Krumvieda
        Maybe its tough to get rid of it because the reasons you don\'t like it aren\'t even true. Turn off Glen Beck.
      WHO
      • 1 Year Ago
      LOL, Ford lies that Japan taxes imports to Japan. No such tax exist. Ford caught not paying taxes in the USA for importing to the USA. Priceless.
        Tweaker
        • 1 Year Ago
        @WHO
        If you are claiming that Japan does not put up stiff import barriers, you are either ignorant or lying.
          • 1 Year Ago
          @Tweaker
          [blocked]
      RMR
      • 1 Year Ago
      The 'chicken-tax' has been around since the end of WWII; it's outdated and no longer necessary. Get rid of it once and for all.
        AngeloD
        • 1 Year Ago
        @RMR
        @RMR: According to Wikipedia the Chicken Tax was instituted in 1963 under LBJ, not at the end of WWII. It's ironic that Ford is being hurt now by a tarriff that was instituted to benefit them years ago.
      the.fog
      • 1 Year Ago
      Should ONLY apply to the japanese automakers.
      Austin
      • 1 Year Ago
      You do know that Chrysler is no longer owned by Daimler-Benz, right? And that Sprinters haven't been sold as Dodges for years?
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