Ford settles US import tariff evasion case, agrees to pay $365 million

In a resolution to a decade-old dispute, Ford Motor will pay a hefty sum of $365 million to settle allegations brought forth by the US Justice Department.

The government accused Ford of violating federal tariff laws by misclassifying and understating the value of hundreds of thousands of its Transit Connect vehicles, imported from Turkey.

The settlement, one of the largest customs penalty settlements in recent history, addresses claims that Ford employed a scheme to circumvent higher duties by misclassifying cargo vans from April 2009 to March 2013.

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"Ford strongly disagrees with many of the characterisations in the DOJ’s statement and admits no liability in this matter. But in the interest of moving on from this complex, decade-old dispute, we have agreed to settle the matter once and for all”, Reuters quoted a Ford spokesperson as saying.

The Justice Department revealed that Ford had imported the vehicles with sham rear seats and temporary features to make them appear as passenger vehicles.

These seats, never intended for passengers, were added to evade the 25 per cent duty rate applicable to cargo vehicles, later removed after Customs clearance.

Back in 2013, Customs and Border Protection ruled that Transit Connects imported as passenger wagons and later converted into cargo vans should be subject to the 25 per cent duty applicable to cargo vehicles, instead of the 2.5 per cent passenger vehicle duty.

Reuters cited Brian Boynton, the head of the DOJ Civil Division, who said, "The government will not permit companies to evade duties by adding sham features to their products and then misclassifying them."

Ford's decision to settle comes as the culmination of a prolonged legal battle, and the company had previously acknowledged the possibility of facing up to $1.3 billion in penalties in 2021.

The 25 per cent tariff, known as the "chicken tax," traces its origins back to a 1960s trade war involving frozen chicken.

This tax, originally imposed on imported light trucks, has since extended to cargo vehicles.

Despite the settlement, Ford shares experienced a 0.5 per cent decline following the resolution of the case.

(Inputs from Reuters)