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Ford Motor Co. accused of evading import Tariffs but settles for $365M. @justice.gov

  1. Facts:

  • Ford Motor Company has agreed to pay the United States $365 million to settle allegations of violating the Tariff Act of 1930.

  • The allegations involved misclassifying hundreds of thousands of Transit Connect vehicles as passenger vehicles instead of cargo vans to avoid higher duties.

  • From April 2009 to March 2013, Ford imported these vehicles from Turkey, presenting them with temporary features, including sham rear seats, to U.S. Customs and Border Protection (CBP) to benefit from a lower duty rate.

  • Additionally, from April 2009 through August 2013, Ford was accused of under-declaring the value of certain Transit Connect vehicles to CBP.

  1. Issue:

  • The core issue revolves around Ford’s scheme to evade paying the correct customs duties by misclassifying and under-declaring the value of their imported Transit Connect cargo vans, which constitutes a violation of United States trade laws.

  1. Rule:

  • Under the Tariff Act of 1930, imported goods must be accurately classified and valued to determine the correct duty rate. Cargo vehicles are subject to a 25% duty rate, whereas vehicles for the transport of persons are subject to a significantly lower duty rate of 2.5%.

  1. Analysis:

  • The government alleged Ford engaged in a deliberate attempt to circumvent U.S. trade laws by adding temporary features to its Transit Connect cargo vans to misclassify them as passenger vehicles, thus paying a lower duty rate. This action not only misrepresented the nature of the products but also resulted in a financial loss to the U.S. government by evading the rightful customs duties. The allegations and subsequent settlement highlight the importance of compliance with trade laws and the consequences of attempting to evade customs duties.

  1. Conclusion:

  • The $365 million settlement between Ford Motor Company and the United States government resolves the allegations of tariff evasion. It serves as a significant victory for American taxpayers and a strong message against trade fraud and non-compliance with U.S. trade laws. The case underscores the commitment of the U.S. government, through its agencies and the Trade Fraud Task Force, to enforce trade laws and ensure that importers pay the correct duties, thereby protecting U.S. revenue and ensuring fair trade practices.

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