Pickup trucks have become incredibly expensive in the United States. One of the primary reasons cited is the so-called “Chicken Tax,” which places an extreme import duty on foreign pickups to America. Here’s what you need to know about it.
Why did the chicken tax happen?
In the early 1960s, the European Common Market was worried about cheap chicken flooding in from America. They set price controls to protect European farmers. The American poultry industry lost a lot of market share and pressured the Kennedy (and later the Johnson) administration to retaliate. Lyndon Johnson retaliated with an executive order in 1964, placing a massive 25% tariff on potato starch, brandy, dextrin and light trucks (pickups and commercial vans). The other tariffs were lifted. The truck tariff remains.
Why were pickup trucks included?
Johnson needed support from the UAW on issues like the Civil Rights Act. Including light trucks was a gift for them. It prevented VW from flooding the market with pickup and commercial versions of the Type 2 Bus that proliferated in Europe. It's also one reason America isn't getting cheaper commercial versions of the ID. Buzz.
What does the chicken tax do?
The 25% tariff on pickup trucks and commercial vans is enormous, about ten times the tariff leveled on other vehicles. It protects the American truck market from cheaper foreign competition. Manufacturers like Toyota and Nissan do sell trucks in America. But they must build them in North America, subject to the same restrictions and labor costs as American manufacturers.
What is the effect of the chicken tax?
Honda and Toyota took over the passenger car industry, out-competing American manufacturers with smaller, cheaper and better vehicles. That didn’t happen with trucks. And the lack of downward pressure allows the Big Three to build larger trucks, charge higher prices and bake in substantial profit margins with pickups. Those profits remain the core business of the American automotive industry.
Are there workarounds for the chicken tax?
Manufacturers have tried them. A chassis cab loophole that allowed manufacturers to import the truck and add the bed later was closed. Subaru sold the BRAT in the United States with (hilariously unsafe) seats and carpeting in the bed to qualify it as a passenger vehicle. Mercedes manufactured kits for the technical final assembly of the Sprinter in South Carolina. And Ford recently got in trouble for importing Transit Connects as passenger vehicles from Turkey and “finishing” them when they arrived in America.
Will the U.S. repeal the Chicken Tax?
Not in the immediate future. Protecting the American auto industry — responsible for millions of jobs directly and indirectly — is incredibly popular. The political climate has moved from free trade agreements that could see the Chicken Tax repealed to enacting more restrictions to promote domestic EV and battery production.
