Tuesday, September 22, 2009

Distortions caused by regulations

The Wall Street Journal tells how Ford assembles vehicles in Turkey, ships them to the U.S., and then drastically alters them here as a way of avoiding tariff regulations that grew out of a chicken tax imposed by Europe on U.S. chickens. It is a good example of the mess that tariffs can cause. What are the costs of practices such as this one:

With the globalization of the auto industry, American companies have joined the game. Until recently, Chrysler Group LLC imported Dodge Sprinter vans made in Düsseldorf, Germany, by former owner Daimler AG. The engine, transmission, axles and wheels were removed, allowing the truck bodies to cross the border as auto components, which aren't subject to the tax. Daimler then reassembled the vehicles at a factory in Ladson, S.C.

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