I read a fascinating article this morning in the Wall Street Journal regarding Ford’s Transit Connect and how the company is circumventing the ridiculous “Chicken Tax” that has been in place since the 1960s.
According to the Journal article, to work around the tax, which puts a 25% tariff on delivery vans imported from Europe, Ford ships the vehicles to the U.S. with seats and windows in place. The vans, called “wagons,” are then not subjected to the 25% tariff. Instead, Ford pays a 2.5% tariff.
After workers remove the seats and windows and make the necessary modifications to the vehicles, they are shipped to dealers as the Transit Connect delivery van, the article says. The tariff savings, apparently to Ford, makes it cost-effective to waste the materials and labor to do this.
One worker at a Baltimore plant that converts the “wagons” into “vans” was quoted by the Journal and probably summed it up best: “I never thought about why we take out the seats, but if that's what the customer wants, that’s what we’ll give them,” Mayso Lawrence said.
Only Ford knows how much this adds to the cost of the vans, but make no mistake, there is a cost. It may not be as high as it would be if there was a 25% tariff in place, but the American consumer still pays.
The Chicken Tax was retaliation from President Johnson in 1963 after Europe began putting high tariffs on U.S. chicken shipped to Europe. But this is no longer a comical matter. It’s costing small businesses in the U.S. real money. But, if that’s what the government wants, that’s what the government gets.