Should U.S. companies be penalized for importing their own products from other countries? Imagine Ford building a

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Should U.S. companies be penalized for importing their own products from other countries? Imagine Ford building a passenger van in Turkey, shipping it to the United States, and then ripping out the back windows and seats to convert it into a delivery van. The fabric and foam from the seats are shredded and become landfill cover, while the steel and glass are recycled in other ways. Seems like a waste, doesn’t it? Well, that’s actually cheaper than paying the 25 percent tariff Ford would have to pay to import its own delivery vans. The windows and seats are there just to get around an ongoing trade spat with Europe, known as the “chicken tax.” In the 1960s, Europe imposed high tariffs on imported chicken due to increased U.S. poultry sales to West Germany. In retaliation, U.S. President Johnson imposed a tax on imports of foreign-made trucks and commercial vans—specifically targeting German-made Volkswagens. The chicken tax has long pestered automakers. Even U.S. automobile companies such as Ford must pay the tariff, which is ironic because U.S. trade rules have protected the U.S. automakers’ truck market for years. However, converting the vehicle into a delivery truck after reaching our shores represents costs of 2.5 percent, significantly lower than the 25 percent tariff if the vehicle came into the country that way.


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Principles of Marketing

ISBN: 978-0132167123

14th Edition

Authors: Philip Kotler, Gary Armstrong

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