Ford has agreed to one of the largest customs penalty settlements in recent U.S. history, according to the Justice Department. The automaker will pay $365 million to resolve allegations that it misclassified vehicles to gain a financial advantage on import tariffs.
Between April 2009 and March 2013, Ford declared that it was importing Transit Connect vans from Turkey for passenger use. However, the U.S. government alleges that the automaker was dishonest about this, aiming to pay the much lower 2.5 percent duty rate, instead of the 25 percent tariff, commonly referred to as the “chicken tax,” that the vans should have been subject to as cargo vehicles.
The Justice Department asserts that Ford misled U.S. Customs and Border Protection by incorporating “sham rear seats,” along with other temporary features, into the vehicles. According to the government’s allegations, upon arrival in America, these rear seats — which were “never intended to be, and never were, used to carry passengers” — were then removed, and the vans were reverted to their original two-seat cargo configuration.
Read: Ford May Pay U.S. $1.3 Billion Fine For Importing Transit As Passenger Van From Turkey
“When companies misclassify imports to avoid paying what they owe, they will be held accountable,” said Acting Associate Attorney General Benjamin C. Mizer. “Today’s settlement is a victory for American taxpayers and for our efforts to combat trade fraud and ensure compliance with United States trade laws.”
However, Ford maintains its innocence in this case, and said that it only agreed to the settlement to close the matter. In 2021, the Blue Oval had mentioned that it could face as much as $1.3 billion in penalties in this case.
“Ford strongly disagrees with many of the characterizations in the DOJ’s statement and admits no liability in this matter,” a Ford spokesperson told Reuters. “But in the interest of moving on from this complex, decade-old dispute, we have agreed to settle the matter once and for all.”
The U.S. claimed that Ford violated the Tariff Act of 1930 by by misrepresenting the classification of its vehicles. The 25 percent tariff on light trucks, which the automaker purportedly attempted to evade, originated from a trade dispute in the 1960s. This dispute arose in response to tariffs imposed by France and West Germany on the importation of U.S. chicken. The tariff is popularly referred to as the “chicken tax” and is applied to foreign-made light trucks and vans.
