Ford Motor said Thursday it could face up to $1.3 billion in penalties after long-running dispute concerning import duties paid on Ford Transit Connect vehicles.
The automaker said after the Supreme Court refused to hear its appeal in 2020 that it paid increased duties for some prior imports, including interest. U.S Customs and Border Protection (CBP) is now seeking extra duties of $181 million and is considering to seek a monetary penalty of “as much as $652 million to $1.3 billion,” Ford said.
The automaker added that it would defend its actions and that any penalty would be based on company’s level of culpability as figured out by the courts.
CBP ruled in 2013 that Transit Connects imported as passenger wagons and later converted into cargo vans were subject to the 25% duty applicable to cargo vehicles, instead of the 2.5% passenger vehicle duty.
These vans were assembled in Turkey.
The Justice Department said the automaker designed, marketed, sold, and delivered the van to costumers exclusively as a two-person cargo van. But to prevent the higher rate of duty that applies to cargo vans as compared to vans mainly designed for passenger transport, petitioner imported each Transit Connect … with a temporary, cheap rear seat that was designed to be immediately removed as soon as the van cleared Customs.
The government noted the seats didn’t had head restraints and was upholstered with cost-reduced fabric that did couldn’t match that of the front seats.
The automaker argued the rear passenger seat satisfied federal safety standards, had seat belts for every seating position, and anchors for the rear seats and seat belts and were street-legal passenger vehicles.
The 25% tariff emerge from a 1960s trade war involving frozen chicken, and the larger tariff on cargo vehicles is also known as the “chicken tax”.
