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The chicken tax protects pickups
The chicken dispute
In the 1960s, European chicken farmers were quickly losing business to cheap American imports. Tariffs were imposed on U.S. poultry, and the United States responded with a 25% tariff on, among other things, foreign-made trucks.
Detroit's shelter
Aggressive lobbying from Detroit has kept those tariffs in place ever since. So when U.S. automakers build trucks, but not cars, they only have two big competitors: the other members of the Big Three, which collectively sell 90% of the nation's trucks.
The market behind it
The market behind that shelter is enormous. Eighty-four percent of new vehicles sold in America are trucks, and last year three and a half times more Ford F-series pickups were sold than Honda Civics.
Why did a chicken dispute tax trucks?
In 1964, President Lyndon Johnson answered the European duties by taxing goods worth roughly what American chicken exporters had lost. The list included potato starch, brandy, and light trucks. Light trucks covered imported vans, and Volkswagen's vans from West Germany were a main target. The other items were later removed from the list, while the truck tariff stayed in place.
Why did Europe tax American chicken?
In 1962, the European Economic Community, the forerunner of the European Union, set up a common farm policy that placed variable levies on poultry imports. West Germany had become a big market for cheap frozen American chicken, and European farmers were losing sales to it. The levies raised the price of imports until the American product could no longer compete. The dispute became known as the Chicken War.
Why do foreign automakers build pickups in Texas?
The 25 percent tariff applies to the finished vehicle when it is imported, so a truck assembled inside the United States falls outside it. Toyota opened a plant in San Antonio, Texas, in 2006 to build its Tundra pickup. Other foreign automakers have likewise assembled large vehicles in American factories. The tariff itself is collected at the border as part of a long-standing schedule of duties.
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