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What is the Chicken Tax?

Chicken tax is a 25% tariff on light trucks imported into the United States. The United States imposed the tariff in 1964 in an executive order issued by President Lyndon Johnson in retaliation for European tariffs on US chicken imports. In the years since, trade barriers have come down and the average US tariff rate on industrial imports stands at 2% from 2022, according to US government figures. But the chicken tax still stands.

The initial order imposed a 25% duty on potato starch, dextrin and brandy as well as light trucks. In the decades that followed, the other products were phased out, but the tariff on light truck imports remained. The chicken tax is also known as the chicken tariff.

Key points to remember

  • The chicken tax is a 25% tariff on imports of light trucks.
  • The chicken tax was originally imposed in 1963 in retaliation for European tariffs on American chicken.
  • The average US duty rate on industrial imports is now 2%.
  • In the 1960s, foreign-made vehicles grew in popularity at the expense of US-made vehicles.
  • In response to pressure from American automakers, President Johnson included light trucks in the chicken tax.

Understanding the Chicken Tax

Factory farming methods developed in the United States in the years following World War II led to a large increase in chicken production, and the efficiency of production led to lower prices. Once a delicacy reserved for the family’s Sunday dinner, chicken has become a staple of the American diet. And there was a lot of surplus chicken for export to Europe. According to a 1962 article in Time magazine, chicken consumption increased by 23% in West Germany in 1961.

A showdown between farmers

But Europe was still struggling to recover from World War II, and European farmers complained that American farmers were monopolizing the chicken market and driving local producers out of their businesses. By the end of 1961, France and Germany had imposed customs duties and price control on Birds of the United States In early 1962, American companies began to complain that they were losing sales. At the end of the year, they estimated that they had lost 25% of their sales due to European intervention in the chicken market. European and American diplomats tried unsuccessfully until 1963 to conclude a chicken trade agreement.

About cars and chickens

Meanwhile, the American auto industry was suffering from its own trade crisis. Imports of Volkswagen cars surged in the early 1960s when Americans adopted the Beetle and its cousin, the Type 2 minivan. question of German automobile imports at the presidential negotiating table, according to a 1997 study. New York Times article.

The chicken tax had a lasting impact on the American industry, for better and for worse.

President Johnson was trying to persuade Walter Reuther, president of the United Auto Workers, not to call a strike just before the 1964 election. The president also wanted union support for his civil rights program. He got what he wanted in exchange for including light trucks in the chicken tax. Sales of Volkswagen trucks and vans in the United States have fallen.

The Chicken Tax Today

Auto industry lobbying has kept the tax alive for all these years. This is arguably the reason why American-made trucks still dominate US truck sales. While it should be noted that many of these and other vehicles are manufactured in Mexico or Canada, both of which may qualify for preferential tariff treatment if they meet specific requirements under the United States Agreement. United Mexico and Canada (USMCA).

Are SUVs subject to chicken tax?

Most SUVs are classified as light trucks and are therefore included in the chicken tax. SUVs classified as cars are not subject to the chicken tax.

Why is it called the chicken tax?

The chicken tax or chicken tariff got its name after several European countries imposed tariffs and other restrictions on imported American birds, especially chicken. American farmers have lost significant income and their cornered market position has shrunk. In response, President Johnson re-engaged by imposing tariffs on certain European imports, such as light trucks, brandy, and potato starches. Today, the chicken tax only applies to light trucks, but the name remains.

What is the Chicken Trade War?

After World War II, advances in technology allowed American farmers to increase chicken production. As a result, they started grabbing a major share of the global chicken market. Under pressure from European farmers, many of whom have gone out of business, several European countries have imposed tariffs and trade controls on chicken and other birds imported from the United States. Simultaneously, the American auto industry was experiencing similar difficulties due to the loss of sales to foreign automakers. In response, President Johnson, seeking to improve automobile sales in the United States and motivated by retaliation, imposed tariffs on imported trucks, potato products, and some spirits.

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