Old Trade Wars: Circumvention and Recycling New Assemblies

Trade wars are certainly not new, but there are always new ways to avoid punitive tariffs as evidenced by an article in this morning's WSJ that "reveals how Ford saves a fortune on import duties by literally trashing the back seats and rear glass of their Transit Connect mini-van made in Turkey." Moreover, they've been doing this for years to get around a decades-old tariff, creating an unnecessarily large carbon footprint to circumvent the trade spat.

The problem started when "In the early 1960s, Europe put high tariffs on imported chicken, taking aim at rising U.S. sales to West Germany. President Johnson retaliated in 1963, in part by targeting German-made Volkswagens with a tax on imports of foreign-made trucks and commercial vans [but not passenger vans]. The 1960s went the way of love beads and sitar records, but the chicken tax never died. Europe still has a tariff on imports of U.S. chicken, and the U.S. still hits delivery vans imported from overseas with a 25% tariff."

So when the newly minted Transit Connect vans arrive in America "their first stop is a brick warehouse [in Baltimore] where ... the [rear] windows and seats are promptly ripped out. The fabric is shredded, the steel parts are broken down, and everything is sent off along with the glass to be recycled ... The space [where the glass has been removed] is plugged with a metal panel that cures for 15 minutes before being tested outside for waterproofing."

While this may seem an absurd waste of resources -- to say nothing of meaningless procurement effort -- "Installing and removing unneeded seats and windows costs the company hundreds of dollars per van, but the import tax falls dramatically, to 2.5 percent, saving thousands." Perhaps the Obama Administration and our legislators who obsess over reducing carbon footprints and landfills -- where "Ford says the shredded seat fabric and foam become landfill cover" -- need to re-visit the sins of our fathers before committing the same acts of folly that invite truly unproductive ingenuity.

William Busch

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