Chicken Tax

Germans suddenly began consuming 23% more chicken in 1961. US was dumping its inexpensive chicken across Europe leading to massive price crashes. So France & Germany put tariffs on chicken imports from US leading to a 67% drop in poultry exports

President Johnson was angry and retaliated by slapping a hefty 25% tax on all imports of brandy, potato starch & light trucks from Europe in 1964. They called it the Chicken Tax

Over time, US removed all items from this list except for Light Trucks to protect local US auto makers from cheap overseas imports

Ford had a van called Transit Connect which was made in Turkey as Europe was its main market. Ford wanted to sell some of these vehicles in US but that meant paying chicken tax for imports. So they found a way

Ford made the Transit Connect with features not required in a cargo van: rear windows & rear seats with belts. So the US customs had to treat them like passenger cars which did not come under the 25% chicken tax

Ford then routed the vehicles to a warehouse in Baltimore, ripped out the back seat & windows. And sent them to the showroom floor for sales. Saving itself millions of dollars in taxes till 2018

A story to kick off a talk on tariffs & loopholes. Where else could you use?

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