When is a passenger van actually a cargo van? It's the obscure legal question at the heart of a trade case that could have profound implications for how American companies respond to President Donald Trump's tariffs.
Trade attorneys are closely watching a case playing out in federal court involving Ford Motor Co. The automaker imported passenger vans, then removed a row of seats and sold the vehicles as cargo vans. In doing so, Ford paid a 2.5 percent import duty on the vans, because they were classified at the border as passenger vehicles, rather than the 25 percent tariff on light trucks that includes cargo vans.
U.S. Customs challenged the practice, accusing Ford of improperly masking its intentions. The Court of International Trade ruled in Ford's favor in 2017, but the government has appealed, and the U.S. Court of Appeals for the Federal Circuit heard oral arguments Monday.
The decision could impact how Customs rules in other duty cases, complicating the ability of companies to avoid U.S. tariffs imposed by the Trump administration since last year, said Suzanne Kane, an attorney at Akin Gump Strauss Hauer & Feld. "It's even higher stakes now,'' Kane said.