The brief trade war between the U.S. and Europe in the early 1960s might seem hardly worth remembering—and it pales in comparison to the political and cultural upheaval that defined that decade.
But any American who has bought a pickup truck in the past 50 years has been collateral damage in that conflict—a conflict that started because European farmers were mad about American exports of frozen chicken.
The 25 percent retaliatory tariffs that President Lyndon B. Johnson set on imported light trucks have fenced off the American pickup truck market from foreign competitors for decades. As a result of the so-called chicken tax, consumers pay higher prices, and a handful of brands have become dominant in the marketplace. The other tariffs that were part of that long-ago trade war have been repealed. This one remains.
"There are a few people highly invested in keeping it around and no one really cares to get rid of it," explains Jordan Golson, a freelance automotive journalist. When it comes to tariffs, he says, "It's not easy to make one of these rules, but it's a thousand times harder to get rid of one."
On this week's show, Golson also discusses the lengths that some foreign truck-makers have gone to in order to avoid those tariffs. That includes the story of the Subaru BRAT: a small pickup truck that was imported to America with seats installed in the truck bed—so it would be classified as a passenger vehicle rather than a cargo vehicle and, thus, exempt from the 25 percent import tax.
Daniel Griswold, an adjunct scholar at the Cato Institute, reminds us that the chicken tax has caused real economic harm in addition to those funny, creative attempts at tariff dodging.
"The U.S. government is artificially constricting competition in that market, and that means higher prices, it means less choice," Griswold says.
Automobiles can be imported to the U.S. with tariffs of just 2.5 percent, and the result has been a far more robust market for consumers and greater foreign investment in making cars in the U.S.—something that hasn't happened in the truck market due to the trade barriers.
The chicken tax has been "a losing proposition all around for Americans, consumers, and the American economy," says Griswold. It's also a great example of how tariffs can stifle, rather than protect, domestic markets.
Further reading for this week's episode:
"Cheap American Chicken Gave Us This Weird Subaru Pickup," by Golson, Wired
"Why Are Pickups So Expensive? Blame the Chicken Tax," by Griswold, Cato Institute
"How a Tax on Chicken Changed the Playing Field for U.S. Automakers," by Sonari Glinton, NPR
Written by Eric Boehm; produced and edited by Hunt Beaty; mixing by Ian Keyser; fact checking by Katherine Sypher
The post <em>Why We Can't Have Nice Things</em>: The 'Chicken Tax' That Makes Pickup Trucks More Expensive appeared first on Reason.com.
Why We Can't Have Nice Things