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Here’s How Ford Cleverly Got the Transit Connect Past Import Taxes

One of my favorite automotive industry stories from the last decade or so is the one about the Ford Transit Connect and the Chicken Tax. Today, I’m going to tell that story, and you’re going to read it, because what else are you going to do? Go back to work?

I’ll start with the Chicken Tax. Way back in the 1960s, a few European countries placed huge tariffs on American chicken exports, presumably to protect their local chicken industry. In retaliation, America put huge tariffs on several foreign-imported goods that commonly came from Europe, including light trucks (this was called the "Chicken Tax," even though it was actually a response to the European tax on American chickens). It may seem odd to think of "light trucks" as "commonly coming from Europe," but the tariff included cargo vans — and at the time, the Volkswagen Bus was reasonably popular here in the United States.

Fast forward 50 years, and the Chicken Tax still exists — and it’s largely been responsible for automakers moving pickup production here. If you’ve ever wondered why all truck-making automakers build their trucks in the States, and why Volkswagen doesn’t sell the Amarok pickup here in America, the Chicken Tax is at least one of the reasons.

And then, Ford decided they would start building a cargo van … in Turkey.

That cargo van was, of course, the Transit Connect, and the first-generation Transit Connect models were all built in Turkey. The problem was that even though the Chicken Tax was initially designed to protect American automakers and retaliate against foreign production, it was now going to cause a problem for Ford: The vans would be subject to a 25 percent tariff from being made overseas. So Ford had an idea.

The idea was this: Since many Transit Connect vans are sold as passenger models rather than cargo models (especially in foreign markets), they would ship the Transit Connect to the United States in the already-available passenger configuration — with rear seats installed — and then remove the seats once the vans arrived. This got them around the tax, which had only been levied on cargo vans and light trucks; Ford would argue these were technically not cargo vans when they arrived at the port, but rather passenger vans, and this allowed them to bend the rules.

Amazingly, this worked for several years — but federal regulators eventually got hip to the scheme. In early 2013, the U.S. government forced Ford to begin paying the full tariff; Car & Driver reported that a customs director, Myles Harmon, noted in an internal document that "the product as entered is not a commercial reality; it exists only to manipulate the tariff schedule." Ouch.

In fairness to Ford, the Transit Connect is also available to consumers in a variety of configurations including what Ford calls a "Passenger Wagon." It has a normal minivan interior and re-configurable seats so, technically speaking, the Transit Connect is more than just a commercial cargo van.

The second-generation Transit Connect, which debuted for the 2014 model year, is no longer built in Turkey — but it’s still built overseas (in Spain), meaning Ford likely still pays that tax despite their brilliant plan to avoid it indefinitely. Find a Ford Transit Connect for sale

Doug DeMuro is an automotive journalist who has written for many online and magazine publications. He once owned a Nissan Cube and a Ferrari 360 Modena. At the same time.

MORE FROM OVERSTEER:
I Bought the Most Hated BMW in the United States
Autotrader Find: 2006 Pontiac GTO With 22 Miles
I Bought a Mercedes E63 AMG Wagon and Drove It 1,200 Miles Home

 

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14 COMMENTS

  1. Up until a few months ago, my local Ford dealer still had a lovely, brand new 2014 Transit Connect passenger van still sitting on the lot.

    Yes, the buying public just loved them as a passenger van.  It had all of the charm of a 15 passenger Econoline 350 van, just in a smaller package.

  2. It reminds me of a particular problem that Lexus had to overcome with the GX when it first came out. A tax loophole allowed for you to deduct the costs as long as it was classified as a truck, or something like that. I seem to remember that they needed to add weight to the car to meet the truck requirements, as many people were taking advantage of the loophole to buy big SUVs.

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