The Chicken Tax is a leftover from a trade war that took place nearly 50 years ago. It has long outlived its original political purpose and it’s time to let it die.
The Chicken Tax was a 25% tariff on potato starch, dextrin, brandy, and light trucks imposed in 1963 by President Lyndon B. Johnson as a response to tariffs placed by France and West Germany on importation of U.S. chicken. France, Europe’s leading producer of chickens, couldn’t compete with American chicken farmers, whose exports threatened to cause severe economic problems. So France persuaded West Germany to go along with what amounted to a ban on the importation of American chicken.
While a retaliatory tariff on comparable goods is a common tactic, light trucks generally aren’t considered part of any food group, so why were they added? The answer is a deal between Johnson and UAW president Walter Reuther, who was concerned about the imports of Volkswagen T2 transporters and the Micro-Bus.
Though the tariffs on the food items were lifted long ago, the Chicken Tax is still collected on commercial vehicle imported for sale in the U.S.
Over the years, the tariff has spawned some ingenious strategies for avoidance. The first compact pickups marketed by Ford and GM, the Mazda-built Courier and Isuzu-built Luv, were shipped from Japan as just chassis-cabs, which were exempt. The pickup beds were added after the trucks arrived in the U.S. Subaru added removable seats to the bed of the Brat. After the federal government changed the definition of commercial truck to eliminate those loopholes, manufacturers started shipping completely-knocked-down (CKD) kits to the U.S. for final assembly here. Mercedes Sprinters were built from CKD at Freightliner’s Custom Chassis operation in Gaffney, South Carolina. Ford spends hundreds of dollars to convert each Transit Connect van from a passenger to a commercial version as it enters the U.S.
In fairness, the Chicken Tax did do the U.S. economy some good: it created jobs as foreign automakers got around it simply by building factories and creating jobs in the U.S., Canada and Mexico. Toyota’s Tundra plant near San Antonio, Texas and Nissan plants in Tennessee and Mississippi are among those producing tariff-free pickups. Ironically, considering that light trucks were added to the tariff to satisfy the United Auto Workers, all of these plants are non-union and have, so far, resisted all organizing attempts by the UAW.
Perhaps it is a prime example of the wisdom of that old adage about being careful what one wishes for.