Tariff engineering

Tariff engineering was validated following the 1881 United States Supreme Court case of Merritt v. Welsh, which dealt with the classification of imported sugar. In this case, the importer added molasses to highly refined sugar which darkened the sugar's color. At that time, the tariff classification for sugar was based on the Dutch standard color, which generally corresponded to actual sugar quality. The Port of New York performed a chemical analysis and determined if molasses had been intentionally added to the sugar for the purpose of reclassification on the tariff schedule. After having found that molasses had been added, the Port of New York applied the higher rate of tariff. The United States Supreme Court found that even though the molasses was added, Congress had clearly stated that the test to be used was the Dutch standard test, and not any other chemical analysis. Thus, the Port of New York was obligated to classify the sugar based solely on the Dutch standard color and must only charge the lower rate of tariff. In explaining his position, Justice Matthews wrote for the majority, "Great stress is laid on the charge that sugars are manufactured in dark colors on purpose to evade our duties. Suppose this is true; has not a manufacturer a right to make his goods as he pleases? If they are less marketable, it is his loss; if they are not less marketable, who has a right to complain? If the duties are affected, there is a plain remedy. Congress can always adopt such laws and regulations as it may deem expedient for protecting the interests of the government." == Examples ==

Columbia Sportswear uses so called “nurse’s pockets”, or small pockets near the waist line, on many of its women's shirts, including the PFG Tamiami, because women's shirts with pockets below the waistline are levied a lower import tariff than shirts without such pockets. Converse Chuck Taylor All-Stars sneakers have soles partially covered in a thin layer of felt when new, in order to be classified as slippers and thus pay a lower import tax duty than similar shoes. The layer usually rubs off within a month of having been worn. Chicken tax Ford Motor Company imported the Ford Transit Connect from Spain as complete passenger vehicles, including rear seat, rear seat belts, and rear glass windows, in order to avoid a 25% tariff on cargo-duty vehicles, known as the Chicken tax, and instead pay the lower tariff of 2.5%. Once the vehicles arrived in the United States, Ford converted the Transit Connect into its cargo van by removing the rear seats, rear seat belts, and sometimes replacing the rear glass with metal panels. Ford appealed to the United States Court of International Trade, which ruled in Ford's favor in 2017 but was overturned on appeal by the United States Court of Appeals for the Federal Circuit in 2019. ==See also==