The Chicken Tax

Ever wonder why you see TV commercial after TV commercial for pickups when light trucks make up only about a sixth of the vehicles on the road? Ever wonder why pickups seem to be so expensive as compared to cars and why there are far fewer pickup truck models to choose from as compared to car models? As with any economic phenomenon, there are lots of reasons but a big one is the leftover tariffs from a long forgotten trade war that filled the headlines in the early 1960s. That trade war was primarily between the US and Western Europe and became known as the Chicken War.

Prior to the 1950s, chicken wasn't anywhere near the staple food that it is today. Chicken was expensive. The Hoover political slogan "A chicken in every pot" was a promise of luxury for all. Chicken farming methods advanced rapidly in the post-WWII years and soon the U.S. dominated the world chicken market. Cheap U.S. chicken exports particularly hit small Western European farmers hardest and their governments responded with tariffs on imported American chicken. The U.S. responded with tariffs of their own. One such tariff was aimed at West Germany's Volkswagen, particularly the incredibly popular VW Bus (ever wonder why they vanished from the roads?).

Over the intervening years, virtually all of the tariffs from the Chicken War have been repealed except for the U.S. import tax on light trucks and pickups. Car companies have moved to circumvent the tariff, to one extent or another, by either manufacturing their trucks in North America or at least doing final assembly here. Some cargo vehicles are even manufactured overseas as passenger vehicles, brought to the U.S. and then their seats are ripped out and cargo beds installed (which is still cheaper than the tariff).

Protected from competition, some economists argue, light trucks have become a huge profit center for U.S. car companies and their incentive to develop new models and keep prices down has been curtailed... all because of cheap chicken.