The Chicken Tax
The Chicken Tax, enacted in 1963, remains one of the most unusual and lasting trade policies in U.S. history, having an outsized impact on the country’s auto industry—particularly on mini trucks. Originally a retaliatory tariff aimed at protecting U.S. poultry producers from European restrictions on chicken imports, the tax imposed a hefty 25% tariff on light trucks imported into the U.S. Although intended to protect American automakers, it inadvertently spurred innovation as foreign companies like Toyota, Nissan, Chevrolet, and Ford developed creative workarounds to keep their compact trucks competitive in the U.S. market.
The Chicken Tax’s Impact on Mini Trucks
By the 1970s, mini trucks were gaining popularity in the U.S. for their smaller size, fuel efficiency, and affordability. However, the Chicken Tax threatened to make these foreign-made vehicles too expensive for U.S. consumers. To dodge the tariff, automakers had to think outside the box. Models like the Chevrolet LUV and Ford Courier became famous for using clever methods to avoid the tax, while Toyota, Nissan, and others also found innovative ways to skirt the tariff and sell their compact trucks in America.
Automakers Dodging the Chicken Tax by Removing Beds
Several automakers, including Chevrolet, Ford, Toyota, and Nissan, avoided the Chicken Tax by importing trucks without beds, then adding them once they reached the U.S. market. The Chevrolet LUV, produced by Isuzu and rebadged by Chevrolet, was introduced in 1972. Chevrolet shipped the LUV as a "chassis cab", without its bed, and installed the bed after arrival in the U.S., avoiding the 25% tariff on fully assembled light trucks. This kept the LUV affordable for American buyers and allowed it to compete with domestic pickups.
Similarly, the Ford Courier, built by Mazda, employed a similar strategy. Ford, Mazda and Mitsubishi imported their trucks as knockdown kits, meaning the trucks were partially assembled in Japan and completed in the U.S., again dodging the full tax. Both Toyota and Nissan used similar tactics with their popular trucks—the Toyota Hilux and Nissan Datsun 620. Like Chevrolet and Ford, they shipped the trucks without beds, installing them after import to avoid the Chicken Tax. These creative approaches helped foreign automakers maintain competitive pricing in the U.S. and establish a foothold in the compact truck market.
Subaru BRAT: A Quirky Solution
Perhaps the most creative tax-dodging strategy came from Subaru with its BRAT (Bi-Drive Recreational All-Terrain Transporter). Subaru bypassed the Chicken Tax by adding two rear-facing seats in the truck bed, classifying the BRAT as a passenger vehicle rather than a light truck. Passenger vehicles weren’t subject to the 25% tariff, allowing Subaru to sell the BRAT at a much lower price than it would have as a truck. Although the rear-facing seats were hardly practical or safe by modern standards, they successfully kept the vehicle out of the tariff’s reach, helping Subaru maintain competitive pricing.
The Long-Term Impact of the Chicken Tax
The Chicken Tax had a profound and lasting impact on the U.S. compact truck market. Initially, domestic automakers like Chevrolet and Ford benefited from partnering with foreign manufacturers and using clever loopholes to avoid the tariff. However, over time, the tax limited competition by making it more expensive for foreign automakers to import compact trucks into the U.S. This led to fewer options and higher prices for consumers, while incentivizing foreign manufacturers like Toyota and Nissan to shift production to the U.S. The effects of the tax are still felt today, as it continues to shape the landscape of the U.S. auto industry by protecting domestic truck manufacturers from foreign competition.
But why is it called the Chicken Tax?
The term "Chicken Tax" originates from the tariff's background, which was initially imposed in response to European countries imposing tariffs on U.S. chicken exports. In the early 1960s, European nations, particularly Germany and France, imposed significant tariffs on American chicken, which was hurting U.S. poultry producers. In retaliation, the U.S. government enacted a 25% tariff on several products, including light trucks, imported from those countries.
While the main intent was to protect U.S. poultry farmers, the tax inadvertently affected the automotive industry, leading to unintended consequences for foreign automakers trying to sell light trucks in the U.S. The nickname "Chicken Tax" has since stuck, reflecting its origins in the poultry trade dispute.
Comentários