![Florida chicken house](https://upload.wikimedia.org/wikipedia/commons/7/78/Florida_chicken_house.jpg)
The Chicken Tax is a 25 percent
tariff
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
on light trucks (and originally on
potato starch
Potato starch is starch extracted from potatoes. The cells of the root tubers of the potato plant contain leucoplasts (starch grains). To extract the starch, the potatoes are crushed, and the starch grains are released from the destroyed cells. T ...
,
dextrin
Dextrins are a group of low-molecular-weight carbohydrates produced by the hydrolysis of starch and glycogen. Dextrins are mixtures of polymers of D-glucose units linked by α-(1→4) or α-(1→6) glycosidic bonds.
Dextrins can be produced from ...
, and
brandy
Brandy is a liquor produced by distilling wine. Brandy generally contains 35–60% alcohol by volume (70–120 US proof) and is typically consumed as an after-dinner digestif. Some brandies are aged in wooden casks. Others are coloured with ...
) imposed in 1964 by the United States under President
Lyndon B. Johnson
Lyndon Baines Johnson (; August 27, 1908January 22, 1973), often referred to by his initials LBJ, was an American politician who served as the 36th president of the United States from 1963 to 1969. He had previously served as the 37th vice ...
in response to tariffs placed by
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
and
West Germany
West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 O ...
on importation of U.S.
chicken
The chicken (''Gallus gallus domesticus'') is a domesticated junglefowl species, with attributes of wild species such as the grey and the Ceylon junglefowl that are originally from Southeastern Asia. Rooster or cock is a term for an adult m ...
.
The period from 1961–1964
of tensions and negotiations surrounding the issue was known as the "Chicken War", taking place at the height of
Cold War
The Cold War is a term commonly used to refer to a period of geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term '' cold war'' is used because the ...
politics.
Eventually, the tariffs on potato starch, dextrin, and brandy were lifted,
but since 1964 this form of
protectionism
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
has remained in place to give US domestic automakers an advantage over imported competitors.
Though concern remains about its repeal,
a 2003
Cato Institute
The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of Koch Industries.Koch Indust ...
study called the tariff "a policy in search of a rationale."
As an
unintended consequence
In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by Ameri ...
, several importers of light trucks have circumvented the tariff via
loopholes, known as
tariff engineering
Tariff engineering refers to design and manufacturing decisions made primarily so that the manufactured good is classified at a lower rate for tariffs than it would have been absent those decisions. It is a loophole whereby an importer pays a lower ...
. For example,
Ford
Ford commonly refers to:
* Ford Motor Company, an automobile manufacturer founded by Henry Ford
* Ford (crossing), a shallow crossing on a river
Ford may also refer to:
Ford Motor Company
* Henry Ford, founder of the Ford Motor Company
* Ford F ...
, which was one of the main beneficiaries of the tax, also evaded it by manufacturing first-generation
Transit Connect
The Ford Transit Connect is a Compact car, compact panel van sold by Ford Motor Company, Ford since 2002. Developed by Ford of Europe, the model line replaced sedan-based vans (Ford Escort (Europe)#Sixth generation (1995–2002), Ford Escort a ...
light trucks for the US market in Turkey; these Transits were fitted-out as passenger vehicles, which allowed Ford to evade the Chicken tax when the vehicles passed customs in the US. The Transits were stripped pre-sale of their rear seats and seatbelts, at a Ford warehouse near Baltimore.
Similarly, to import cargo vans built in Germany, Mercedes disassembled fully-completed vehicles and shipped the components to "a small kit assembly building" in
South Carolina
)''Animis opibusque parati'' ( for, , Latin, Prepared in mind and resources, links=no)
, anthem = " Carolina";" South Carolina On My Mind"
, Former = Province of South Carolina
, seat = Columbia
, LargestCity = Charleston
, LargestMetro = ...
, where they were reassembled.
The resulting vehicles emerged as locally manufactured, free from the tariff.
Background
Largely because of post-World War II
intensive chicken farming and accompanying price reductions, chicken, once internationally synonymous with luxury, became a
staple food
A staple food, food staple, or simply a staple, is a food that is eaten often and in such quantities that it constitutes a dominant portion of a standard diet for a given person or group of people, supplying a large fraction of energy needs and ...
in the U.S.
Prior to the early 1960s, not only had chicken remained prohibitively expensive in Europe, but it had also remained a delicacy.
With imports of inexpensive chicken from the U.S., chicken prices fell quickly and sharply across Europe, radically affecting European chicken consumption.
In 1961, per capita chicken consumption rose up to 23% in West Germany.
U.S. chicken captured nearly half of the imported European chicken market.
Subsequently, the Dutch accused the U.S. of dumping chickens at prices below cost of production.
The French government banned U.S. chicken and raised concerns that hormones could affect male virility.
German farmers' associations accused U.S. poultry firms of fattening chicken artificially with
arsenic
Arsenic is a chemical element with the symbol As and atomic number 33. Arsenic occurs in many minerals, usually in combination with sulfur and metals, but also as a pure elemental crystal. Arsenic is a metalloid. It has various allotropes, but ...
.
Coming on the heels of a "crisis in trade relations between the U.S. and the
Common Market
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...
,"
Europe moved ahead with tariffs, intending that they would encourage Europe's postwar agricultural self-sufficiency.
European markets began setting chicken price controls.
France introduced the higher tariff first, persuading West Germany to join them—even while the French hoped to win a larger share of the profitable German chicken market after excluding U.S. chicken.
Europe adopted the
Common Agricultural Policy
The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the ...
, imposing minimum import prices on all imported chicken and nullifying prior tariff
bindings and concessions.
Beginning in 1962, the U.S. accused Europe's Common Market of unfairly restricting imports of American poultry. By August 1962, U.S. exporters had lost 25% of their European chicken sales.
Losses to the U.S. poultry industry were estimated at million
(equivalent to $$ million in ).
Senator
J. William Fulbright
James William Fulbright (April 9, 1905 – February 9, 1995) was an American politician, academic, and statesman who represented Arkansas in the United States Senate from 1945 until his resignation in 1974. , Fulbright is the longest serving chair ...
, chairman of the
Senate Foreign Relations Committee
The United States Senate Committee on Foreign Relations is a standing committee of the U.S. Senate charged with leading foreign-policy legislation and debate in the Senate. It is generally responsible for overseeing and funding foreign aid p ...
and Democratic Senator from Arkansas, a chief U.S. poultry-producing state, interrupted a
NATO
The North Atlantic Treaty Organization (NATO, ; french: Organisation du traité de l'Atlantique nord, ), also called the North Atlantic Alliance, is an intergovernmental military alliance between 30 member states – 28 European and two No ...
debate on nuclear armament to protest trade sanctions on U.S. chicken,
going so far as to threaten cutting U.S. troops in NATO.
Konrad Adenauer
Konrad Hermann Joseph Adenauer (; 5 January 1876 – 19 April 1967) was a Germany, German statesman who served as the first Chancellor of Germany, chancellor of the Federal Republic of Germany from 1949 to 1963. From 1946 to 1966, he was the fir ...
, then
Chancellor of Germany
The chancellor of Germany, officially the federal chancellor of the Federal Republic of Germany,; often shortened to ''Bundeskanzler''/''Bundeskanzlerin'', / is the head of the federal government of Germany and the commander in chief of the Ge ...
, later reported that President
John F. Kennedy
John Fitzgerald Kennedy (May 29, 1917 – November 22, 1963), often referred to by his initials JFK and the nickname Jack, was an American politician who served as the 35th president of the United States from 1961 until his assassination ...
and he had a great deal of correspondence over a period of two years, about
Berlin
Berlin ( , ) is the capital and largest city of Germany by both area and population. Its 3.7 million inhabitants make it the European Union's most populous city, according to population within city limits. One of Germany's sixteen constitue ...
,
Laos
Laos (, ''Lāo'' )), officially the Lao People's Democratic Republic ( Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ, French: République démocratique populaire lao), is a socialist ...
, the
Bay of Pigs Invasion
The Bay of Pigs Invasion (, sometimes called ''Invasión de Playa Girón'' or ''Batalla de Playa Girón'' after the Playa Girón) was a failed military landing operation on the southwestern coast of Cuba in 1961 by Cuban exiles, covertly fina ...
, "and I guess that about half of it has been about chickens."
Diplomacy failure and the UAW
![Kombi Pick Up Aço](https://upload.wikimedia.org/wikipedia/commons/a/a9/Kombi_Pick_Up_A%C3%A7o.jpg)
Diplomacy failed after 18 months,
and on December 4, 1963, President Johnson imposed a 25% tax (almost 10 times the average U.S. tariff) by executive order (Proclamation 3564)
on potato starch, dextrin, brandy, and light trucks, effective from 7 January 1964.
With Johnson's proclamation,
the U.S. had invoked its right under the
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its pre ...
(GATT),
whereby an offended nation may increase tariffs by an equal amount to losses from discriminating tariffs. Officially, the tax targeted items imported from Europe approximating the value of lost American chicken sales to Europe.
In retrospect, audio tapes from the Johnson White House, revealed a ''
quid pro quo
Quid pro quo ('what for what' in Latin) is a Latin phrase used in English to mean an exchange of goods or services, in which one transfer is contingent upon the other; "a favor for a favor". Phrases with similar meanings include: "give and take", ...
'' unrelated to chicken. In January 1964, President Johnson attempted to convince
United Auto Workers
The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, better known as the United Auto Workers (UAW), is an American labor union that represents workers in the United States (including Puerto Rico ...
' president
Walter Reuther
Walter Philip Reuther (; September 1, 1907 – May 9, 1970) was an American leader of organized labor and civil rights activist who built the United Automobile Workers (UAW) into one of the most progressive labor unions in American history. He ...
not to initiate a strike just before
the 1964 election and to support the president's civil-rights platform. Reuther, in turn, wanted Johnson to respond to
Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
's increased shipments to the United States.
The Chicken Tax directly curtailed importation of German-built
Volkswagen Type 2
The Volkswagen Type 2, known officially (depending on body type) as the Transporter, Kombi or Microbus, or, informally, as the Bus (US), Camper (UK) or Bulli (Germany), is a forward control light commercial vehicle introduced in 1950 by the Ge ...
s in configurations that qualified them as
light trucks, that is, commercial vans and pickups.
In 1964, U.S. imports of "automobile trucks" from West Germany declined to a value of millionabout one-third the value imported in the previous year (equivalent to $ million in ). Soon after, Volkswagen cargo vans and pickup trucks, the intended targets, "practically disappeared from the U.S. market."
VW Type 2s were not the only vehicle line affected. As a direct result of the Chicken Tax, Japanese automakers Toyota (with its
Publica
VEB Typoart was the only type foundry of East Germany. It was a state-owned enterprise (" Volkseigener Betrieb") located in Dresden. The foundry's most influential art directors were Herbert Thannhäuser (until 1963) and Albert Kapr (until 1987) ...
,
Crown
A crown is a traditional form of head adornment, or hat, worn by monarchs as a symbol of their power and dignity. A crown is often, by extension, a symbol of the monarch's government or items endorsed by it. The word itself is used, partic ...
, and
Corona
Corona (from the Latin for 'crown') most commonly refers to:
* Stellar corona, the outer atmosphere of the Sun or another star
* Corona (beer), a Mexican beer
* Corona, informal term for the coronavirus SARS-CoV-2, which causes the COVID-19 di ...
coupe utes), Datsun (
Sunny truck), Isuzu (
Wasp
A wasp is any insect of the narrow-waisted suborder Apocrita of the order Hymenoptera which is neither a bee nor an ant; this excludes the broad-waisted sawflies (Symphyta), which look somewhat like wasps, but are in a separate suborder. Th ...
), and Mazda (
Familia), which were selling pickup trucks,
coupe utility vehicles, and
panel deliveries in the US at the time, pulled these models out of the North American and Caribbean markets and did not bring over many models sold elsewhere.
Ramifications
![Ford Transit Connect -- 08-25-2009](https://upload.wikimedia.org/wikipedia/commons/2/2e/Ford_Transit_Connect_--_08-25-2009.jpg)
The tariff affected any country seeking to bring light trucks into the U.S. and effectively "squeezed smaller Asian truck companies out of the American pickup market."
Over the intervening years, Detroit lobbied to protect the light-truck tariff, thereby reducing pressure on Detroit to introduce vehicles that polluted less and that offered increased fuel economy.
, the 1964 tariff of 25% remains levied on imported light trucks.
Robert Z. Lawrence, professor of international trade and investment at
Harvard University
Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
, contends the tax crippled the U.S. automobile industry by insulating it from real competition in light trucks for 40 years.
Circumventing the tariff
Japanese manufacturers initially found they could export "
chassis cab
A chassis cab, also called a cab chassis or half truck, is a type of vehicle construction, often found in medium duty truck commercial vehicles.
Instead of supplying the customer with a factory pre-assembled flatbed, cargo container, or other eq ...
" configurations (which included the entire light truck, less the cargo box or truck bed) with only a 4% tariff.
A truck bed would subsequently be attached to the chassis in the United States and the vehicle could be sold as a light truck. Examples included the
Chevrolet LUV
The Chevrolet LUV and the later Chevrolet LUV D-Max are light pickup trucks designed and manufactured by Isuzu and marketed in the Americas since 1972 by Chevrolet over four generations as rebadged variants of the Isuzu Faster and D-Max.
''L ...
and
Ford Courier
Ford Courier is a model nameplate used by Ford since the early 1950s. First used in North America for a sedan delivery, the Courier nameplate has seen use worldwide for multiple types of vehicles. The Courier nameplate was also used by Ford for ...
. The "chassis-cab" loophole was closed in 1980.
From 1978–1987, the
Subaru BRAT
The Subaru BRAT (acronym for “Bi-drive Recreational All-terrain Transporter”) was a light-duty, four-wheel drive coupé utility, version of the Subaru Leone originally introduced in 1977. The BRAT was developed directly from the company's fou ...
carried two rear-facing seats (with seatbelts and carpeting) in its rear bed to meet classification as a "passenger vehicle" and not a
light truck
Light truck or light-duty truck is a US classification for vehicles with a gross vehicle weight up to and a payload capacity up to 4,000 pounds (1,815 kg). Similar goods vehicle classes in the European Union, Canada, Australia, and New Zealan ...
.
The U.S. Customs Service changed vehicle classifications in 1989, automatically relegating two-door SUVs to light-truck status.
Toyota Motor Corp.,
Nissan Motor Co.,
Suzuki
is a Japan, Japanese multinational corporation headquartered in Minami-ku, Hamamatsu, Japan. Suzuki manufactures automobiles, motorcycles, All-terrain vehicle, all-terrain vehicles (ATVs), outboard motor, outboard marine engines, wheelchairs ...
(through
a joint venture with GM), and
Honda Motor Co. eventually built assembly plants in the U.S. and Canada in response to the tariff.
From 2001 to 2006, cargo van versions of the
Mercedes and Dodge Sprinter were manufactured in assembly kit form in
Düsseldorf
Düsseldorf ( , , ; often in English sources; Low Franconian and Ripuarian: ''Düsseldörp'' ; archaic nl, Dusseldorp ) is the capital city of North Rhine-Westphalia, the most populous state of Germany. It is the second-largest city in th ...
, Germany, then shipped to a factory in
Gaffney, South Carolina
Gaffney is a city in and the seat of Cherokee County, South Carolina, United States, in the Upstate region of South Carolina. Gaffney is known as the "Peach Capital of South Carolina". The population was 12,539 at the 2010 census, with an esti ...
, for final assembly with a proportion of locally sourced parts complementing the imported components.
The cargo versions would have been subject to the tax if imported as complete units, thus the importation in
knock-down kit
A knock-down kit (also knockdown kit, knocked-down kit, or simply knockdown or KD) is a collection of parts required to assemble a product. The parts are typically manufactured in one country or region, then exported to another country or region ...
form for U.S. assembly.
Ford imported all of its first-generation
Ford Transit Connect
The Ford Transit Connect is a compact panel van sold by Ford since 2002. Developed by Ford of Europe, the model line replaced sedan-based vans ( Ford Escort and Ford Courier vans) with a dedicated commercial vehicle platform. The model lin ...
models as "passenger vehicles" by including rear windows, rear seats, and rear seat belts.
The vehicles are exported from Turkey on ships owned by
Wallenius Wilhelmsen Logistics (WWL), arrive in Baltimore, and are converted back into light trucks at WWL's Vehicle Services Americas, Inc. facility by replacing rear windows with metal panels and removing the rear seats and seat belts.
The removed parts are not shipped back to Turkey for reuse, but shredded and recycled in Ohio.
The process exploits the loophole in the customs definition of a light truck; as cargo does not need seats with seat belts or rear windows, presence of those items automatically qualifies the vehicle as a "passenger vehicle" and exempts the vehicle from "light truck" status. The process costs Ford hundreds of dollars per van, but saves thousands in taxes.
U.S. Customs and Border Protection
United States Customs and Border Protection (CBP) is the largest federal law enforcement agency of the United States Department of Homeland Security. It is the country's primary border control organization, charged with regulating and facilit ...
estimated that between 2002 and 2018 the practice saved Ford million in tariffs.
Customs and Border Protection (CBP) ruled in 2013 that Transit Connects imported by Ford as passenger wagons and later converted into cargo vans should be subject to the 25% duty rate applicable to vans and not to the 2.5% rate applicable to passenger vehicles. Ford sued and finally, in 2020, the
Supreme Court
A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...
declined to hear the case which confirmed the position of CBP.
Chrysler introduced the Ram ProMaster City, an Americanized version of the
Fiat Doblò
The Fiat Doblò is a panel van and leisure activity vehicle produced by Italian automaker Fiat since 2000. It was unveiled at the Paris Motor Show in October 2000. A second-generation Doblò succeeded the original vehicle in 2010 for most market ...
, in 2015 — building the vehicle at the
Tofaş
Tofaş (acronym for ''Türk Otomobil Fabrikası Anonim Şirketi''; ''Turkish Automobile Factory Joint-Stock Company'' pronounced ) is a Turkish automobile manufacturer which was established in 1968 by Vehbi Koç, who was the founder of Koç Ho ...
plant in Turkey, importing only passenger configurations and subsequently converting cargo configurations.
In 2009,
Mahindra & Mahindra Limited announced it would export pickup trucks from India in knock-down kit form, again to circumvent the tax.
These are complete vehicles that can be assembled in the U.S. from kits of parts shipped in crates.
The export plans were later cancelled.
Light trucks manufactured in Mexico and Canada, such as the
Ram series of trucks manufactured in
Saltillo
Saltillo () is the capital and largest city of the northeastern Mexican state of Coahuila and is also the municipal seat of the municipality of the same name. Mexico City, Monterrey, and Saltillo are all connected by a major railroad and highwa ...
,
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
, and Canadian-built Chevrolet, GMC, and Ford truck models, are not subject to the tax under the
North American Free Trade Agreement
The North American Free Trade Agreement (NAFTA ; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada, Mexico, and the United States that crea ...
, and from July 1, 2020, the
United States–Mexico–Canada Agreement
The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) Commonly known as the United States–Mexico–Canada Agreement (USMCA) in the United States and the Canada–United States–Mexico Agreement (CU ...
.
References
Further reading
* {{cite book , title=The Chicken War: an International Trade Conflict Between the United States and the European Economic Community, 1961–64 , last=Talbot , first=Ross B. , year=1978 , publisher=Iowa State University Press , location=Ames, isbn=978-0-8138-0265-7 , url=https://books.google.com/books?id=iB00AAAAMAAJ
Protectionism in the United States
Trade disputes
General Agreement on Tariffs and Trade
Vehicle taxes
Presidency of Lyndon B. Johnson
United States federal trade legislation
France–United States relations
Germany–United States relations
1963 in international relations