David R. Henderson  

Hammock on the Chicken Tax and Other Tariffs

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Libertarianism Against the Wel... The Emperor repeatedly forgets...
The most ridiculous result of the Chicken Tax is surely the Ford Transit Connect, which is produced in Turkey and Spain. All Transit Connects are imported with rear windows and rear seats with seat belts, making them passenger vehicles. Once they arrive in the United States, Ford rips out and recycles the windows, the seats, and the rear seat belts. Ford also blocks the rear windows with solid panels. Doing this transforms them into light trucks.
This is from Michael Hammock, "Bizarre Tales of Tariffs," one of the two Econlib Feature Articles for March. Read the whole thing.

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COMMENTS (5 to date)
Harry Watson writes:

In the past we made ball studs for the transit connect. They were made in Rockford Il, shipped to the Czech republic were they were put into a sub assembly. From there they went to Germany where they were put into a larger suspension assembly and then to Turkey where the larger assembly was attached to the vehicle. The vehicle was then shipped to the USA.

Mike Hammock writes:

Harry,

That's interesting--there are a lot of international components in any vehicle nowadays.

The Transit line was updated recently, and I looked around to see if there were any changes to the manufacturing sources and the Chicken Tax avoidance procedures, but as far as I can tell, the vehicle still comes from Spain and Turkey, and the same tricks are still being used.

Silas Barta writes:

And this isn't considered an illegal circumvention of the tariff? Do the regulators never give feedback to the legislators that, "hey, is this the kind of thing you wanted to encourage with the law?"

Mike Hammock writes:

Silas Barton,

Congress does sometimes revise the law to deal with firms trying to circumvent a tariff. I mentioned in the story that congress closed the "cab chassis" loophole in 1980. They just don't have the time or inclination or incentive to close more loopholes, and some probably can't be closed without creating other perverse incentives.

And, of course, the best way to get rid of this kind of behavior is to simply eliminate the tariffs altogether.

Niklas Blanchard writes:

Dani Rodrik had a post on this a long time ago. It is still one of my favorite "unintended consequence" stories to explain to people.

http://rodrik.typepad.com/dani_rodriks_weblog/2009/05/the-chickens-have-come-home-to-roost.html

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