Chicken TAX
25% tariff on imported light trucks has existed since 1963 and is still in effect. It was targeted at VW.
Chicken Tax.
At 25 percent, the import tariff is virtually prohibitive. In 2001, fewer than 7,000 pickups were imported from outside North America. That’s only 0.23 percent of almost 3 million purchased. Without imports, supply is smaller, choices are fewer, and domestic producers are the only game in town. It’s a veritable sellers’ market, sanctioned under official U.S. policy. And truck buyers — if you’ll pardon the pun — carry the load.
The tariff is a vestige of a 40-year old dispute between the United States and Europe. In 1962, the European Economic Community raised import tariffs on chicken, which U.S. exporters were selling with great success in Europe.
After diplomacy failed, President Johnson authorized retaliatory tariffs against four products important to European exporters. Among them was “automobile trucks,” a key export of West Germany’s Volkswagen.
Intended to persuade Europe to abandon its protectionist chicken policy, the truck tariff was an abject failure. U.S. exporters quickly lost the European chicken market and Volkswagen cargo vans and pickup trucks practically disappeared from the U.S. market.
Japanese producers, who were beginning to export pickups to the United States at that time, were also hurt by the tariff. To remain viable, they began exporting chassis (the entire truck minus the bed), which were subject to a more tolerable 4 percent tariff. After importation, a bed was attached to the chassis and the unit was sold as a pickup truck. The once-ubiquitous Chevy Luv was constructed from Japanese parts and sold according to this formula.
In 1980, at the behest of the Big Three and the United Autoworkers, the U.S. Customs Service reclassified cab chassis as trucks, subjecting them to the 25 percent duty and closing the loophole through which foreign light trucks were made available to U.S. consumers.
U.S. protectionism encouraged Japanese investment in U.S. vehicle production. First came Honda in 1982. Soon after came Nissan, Toyota, Mazda, Subaru, Isuzu, and Mitsubishi, and even the Germany-based BMW and Mercedes-Benz. Today, 32 different foreign nameplate vehicles are produced in the United States.
