I have to hand it to the bean-counter who dreamed up this classic tariff evasion plan.
Delta Air Lines has taken a creative approach to sidestepping U.S. tariffs by rerouting a brand-new Airbus A350-900 (tail number N528DN) from Toulouse, France, to Tokyo, Japan. The move allows the aircraft to be classified as "used" before entering the U.S. airspace, potentially avoiding import duties.
There's more at the link.
Of course, now Delta has to persuade US customs and import officials that the plane really is "used", rather than "thinly-disguised new". Given that we're talking about an aircraft worth well into nine figures, that might be easier said than done! I rather suspect that Delta's initial claim is going to be denied in red ink, with exclamation marks, and that the whole affair will be sorted out in court. Still, nice try, Delta!
Peter
17 comments:
Don’t car dealerships do this? Once off the lot the car is “used”.
nice try indeed. so a used plane is going to bring me items medication, etc that are "used?. Hmmm, wonder if I test drive a new car at the dealership, does that make it a used car? How many miles does it take to qualify an airplane as used, same amount as with a car, truck? too much time today to think about this.
We used to be able to take 'delivery' of European vehicles overseas and drive them for a minimum of 500 miles, then ship them back to our bases as 'used' cars...
About the only way I can see Delta getting away with this scheme is if that tail-number is exclusively used between foreign destinations, if Delta is allowed to do that at all.
Otherwise they are just delaying when they have to pay up. The point of origin is still Europe, even if the port they enter from is Japan.
Leave it to bear counters to come with it. Lawyers with eye shades.
How can it be used if Delta is the one flying it to another location before flying to the USA?
Go search for the Ford van tariff evasion case, and how unamused the DOJ was over a similar "creative" solution.
This is my opinion and a not very well informed one. I THINK the primary purpose of this tariff brew-ha-ha is to force other countries that have been ripping us off for years, decades even, to adjust their own tariff and trade structures. This is just diplomacy with an economic hammer behind your back. A secondary purpose is to incentivize (currently using a stick rather than a carrot) US companies to bring work that has been outsourced to other countries back home and provide jobs, career paths, growth, etc here. Both are slowly working, again I THINK. I have watched numerous webinars lately on how to avoid or minimize tariffs, but these techniques are not new, they are codified in law and practice but have not, until now, been economically as important (free trade zones, special warehouses in the US, but "technically" outside the US, transfer pricing, customs drawbacks for re-export, etc). I did this stuff in the 90's, it's not new. US companies were already looking at "on-shoring" due to supply chain unreliability. They just needed ~more~ financial reasons to get off their comfy boardroom chairs and make it happen. AI and robotics will certainly help make this more economically viable. But the bottom line is Trump sees that we are being duped by other countries and he wants it to stop. They drop their trade barriers, we drop ours. Some countries have figured this out and adjusted already. Give it some time and it will settle out.
First off, I applaud Delta for attempting to circumvent the tariffs. As a general rule I support anything that will keep .gov out of someone’s wallet. Note that this is absolutely regardless of how I feel about Delta as a carrier, Delta as a company, or whatever political critter is sitting behind the big desk at 1600 Pennsylvania Avenue.
This is a very low cost, potentially very high gain move for Delta… but I wish them luck. No new vehicle on a dealer lot has 0 miles on it and returned products get restocked and sold as “new” every single day.
That was an odd one. Ford lost and paid out a few hundred million… then kept right on doing the same thing until the Transit Connect was discontinued a couple of years ago. I guess Ford finally lined enough of the right pockets for .gov to leave them alone. I’ve always wanted to do the leg work to see if Ford actually paid that fine or not but never took the time.
There are well-known tax law principles that will sabotage this kind of monkey business. These transactions lack genuine economic substance.
Delta is the original purchaser and they bought it new. Seems like there has to be a change of ownership in order for it to have been purchased "used".
This is congruent with my assessment. There are a lot of loud hysterical bedwetters out there who obviously have no familiarity with The Art of the Deal.
Boeing used to do something similar to avoid Washington State sales tax.
They should be incentivized to buy american, but boeing is not a great product these days.
And yes, they could have kept it in asia for months or years if they had an asia network to fly it on. But richard anderson dismantled that years ago.
This has been done for years in many industries, particularly the car industry. For instance Volvo has had a program where the car is delivered to you in Sweden (you get airfare to Sweden for yourself and another person). You drive around in Europe for a few days, leave the car with Volvo, and fly back. A bit latter your car is delivered to you in the US and the import duties are for a used vehicle.
If you take delivery and ownership of it overseas and then import the car it does indeed qualify as used for the import taxes.
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