ARTICLE
26 March 2024

Ford Motor Company Settles Claims Relating To Under-Valued Vehicles For $365M

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Diaz Trade Law

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A boutique law firm with a track record of success, Diaz Trade Law has rapidly become one of the nation’s leading Customs and International Trade Law firms. Diaz Trade Law’s diverse team of attorneys specialize in all aspects of U.S. federal trade law, from compliance to resolution of urgent issues.
Ford Motor Company has agreed to pay $365 million for allegedly misclassifying and understating the value of hundreds of thousands of vehicles.
United States International Law
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Ford Motor Company has agreed to pay $365 million for allegedly misclassifying and understating the value of hundreds of thousands of vehicles.

According to the Department of Justice, Ford engaged in a scheme to avoid higher duties by misclassifying cargo vans. Between 2009 and 2013, the company imported Transit Connect cargo vans into the United States but presented them to Customs and Border Protection (CBP) with temporary seats and other features to make them appear to be passenger vehicles. The seats were never intended to carry passengers and Ford removed them as part of post-importation processing. The inclusion of the seats allowed Ford to avoid paying the 25% duty rate for cargo vehicles and instead they paid a duty rate of just 2.5%.

This case dates back to February 2012 when the Port of Baltimore advised Ford it was initiating an investigation into Ford's classification practices. (Typically, prior to investigating an entity, CBP sends a request for information first. For more information on how this process typically begins read "Now, More than Ever, Be Wary of and Responsive to a CBP Form 28!").

In 2013 Customs determined that the vans were improperly classified and liquidated the vehicles at the 25% duty rate. Ford protested, and Customs denied the protest. Ford then filed a complaint with the U.S. Court of International Trade (CIT). The CIT agreed with Ford, finding that Ford engaged in legitimate tariff engineering. The government appealed to the United States Court of Appeals for the Federal Circuit where the Court reversed CIT's decision. Ford appealed to the Supreme Court but the Court denied to hear the case.

The settlement is one of the largest customs penalty settlements in recent history.

This case, as well as other similarly controversial ones, highlight the need for a cautious, concerted effort to both modify the imported good, while fully adhering to US law.

Diaz Trade Law has successfully assisted multiple clients in their tariff-engineering efforts, resulting in a legal avoidance of potentially crippling duties.

Read more about undervaluing and mitigating tariffs here:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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