Tariff circumvention
As the Transit Connect is a light truck assembled outside of North America, Ford imports the first and second-generation Transit Connect into the United States as a passenger vehicle, equipping it with rear side windows, rear seats (and rear seat belts) in an effort to circumvent the 25% tariff on imported light trucks,[1] as imported passenger vehicles were subject to a lower 2.5% tariff. The first-generation vehicles were exported from Turkey to Baltimore on cargo ships owned by Wallenius Wilhelmsen Logistics. Upon their arrival, cargo examples of the Transit Connect were converted into commercial vehicles at a WWL Vehicle Services Americas Inc. facility. With the exception of Transit Connect Wagons, rear windows on Transit Connects were replaced by metal panels and rear seats/seatbelts were deleted; the removed parts were recycled.[1]
The process exploited a perceived loophole in the customs definition of a commercial vehicle. As cargo does not need seats with seat belts or rear windows, presence of those items exempted the vehicle from commercial vehicle status. While the conversion cost Ford hundreds of dollars per vehicle, the company saved thousands of dollars over paying the tariff.[1] To streamline the process, Ford only exported the long-wheelbase, high-roof Transit Connect to North America. With a height of 79 inches, the model line was only an inch lower than the lowest-height E-Series van, precluding its access to lower-height parking garages.[29]
For the second generation of the model line, Ford shifted production of the model line from Turkey to Spain, but continued to rely on imported production as a source for the Transit Connect in North America. In 2013, US Customs told Ford that they must stop this practice of importing vans disguised as passenger cars.[30] As of July 2018, Ford continued to employ the loophole but remained continuously in court over the practice.[30][31] On 7 June 2019, the United States won its appeal in the Federal Appellate Court. The court determined that the Ford Transit Connect was a vehicle for the transportation of cargo.[32]
Since 2019 production, the conversion process of Transit Connects has undergone major revision. While all vehicles are still imported from Spain as passenger vehicles and converted to cargo vans (a process that happens to approximately 85% of Transit Connects imported to North America),[18] the conversion no longer involves the disposal/recycling of the removed parts; instead, the removed rear seats and rear window components are shipped back to Ford in Spain for reuse.[18]
