Ford Settles 'Chicken Tax' Evasion for $365M
Ford Motor Co. has agreed to pay a hefty $365 million fine to settle claims of dodging U.S. tariffs on imported cargo vans. Known as the 'chicken tax', this 25% tariff has been a hurdle for automakers since 1964, with many, including Ford, exploring workarounds.
The 'chicken tax' was imposed in retaliation for European tariffs on U.S. chicken imports. Ford allegedly circumvented this tax by temporarily installing rear seats in Transit Connect cargo vans assembled in Turkey, making them appear as passenger vehicles exempt from the tariff. This practice occurred from April 2009 to March 2013.
Light-duty trucks, which make up 68% of the U.S. market and 83% of production by the Detroit Three automakers, are often assembled in the U.S. due to the 'chicken tax'. Other automakers, like Subaru, have also attempted to avoid the tax by adding unnecessary seats. However, some argue that ending the 'chicken tax' may not significantly boost competition or change customer preferences, as major producers are already operating in the U.S.
Ford's $365 million settlement is one of the largest customs penalty settlements in recent history. The 'chicken tax' continues to impact the automotive industry, with automakers finding creative ways to navigate the tariff. Some policy experts suggest that the tax advantages domestic producers, making it easier for General Motors, Ford, and Stellantis to dominate the light-duty truck segment.
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