Let’s face it, the Trans-Pacific Partnership was doomed no matter who won the presidency. That lady, the orange guy who won, hell, even that other guy—they all pledged to get rid of the trade agreement. Sure, there’s a number of ways that our withdrawal from the TPP will affect the auto industry, but one of those ways is that the Chicken Tax is here to stay. And that’s a shame.
For those of you not into poultry or imported utility vehicles, some explanation of the Chicken Tax is probably in order. The Chicken Tax is a 1963 tariff placed on imported on potato starch, brandy, dextrose, and, yes, trucks. The reason for this 25 percent tax was to retaliate at (then West) Germany for putting a tariff on plump, juicy American chickens sold to Germany.
So, the reason we can’t get all those cool-looking utes and small trucks the rest of the world has—the Volkswagen Amarok, for example, or even the Ford Ranger sold abroad—is because if anyone tried to sell them here, they’d get hit with a 25 percent price markup, which just wouldn’t work for U.S. buyers.
Sure, for a while in the 1970s and 1980s there were some good loopholes, like sticking a pair of seats in the bed of a Subaru Brat and calling it a “passenger car,” but most of those loopholes were closed. Some loopholes still exist; that’s why Mercedes builds Sprinter vans in Europe, then takes them apart and ships them to a re-assembly plant in South Carolina, for example. For the most part, though, if you want to sell a truck in the U.S., you have to build it here.
What that’s done is made the U.S. truck market very risk-adverse and focused only on the trucks that make the most money: full-sized pickups. Any experimentation with more niche or limited-market vehicles, like, say, a non-huge pickup truck, just isn’t worth trying, financially, thanks in large part to the Chicken Tax.
The former head of Hyundai North America, who makes a variety of smaller trucks for the rest of the world, John Krafcik, described the situation like this:
“I think what is lost the most is low-volume experimentation and innovation in pickups. As soon as you get to that level of investment, the risks become so great that the solutions become fairly mainstream.”
The TPP was supposed to phase out the Chicken Tax over time, at least for the signatories of the treaty. That would have meant that European trucks like the VW Amarok would still be affected, but trucks from Japanese automakers would not. And, it wouldn’t have been fast—it would have been more of a gradual phase-out that would have taken over a decade.
Still, it was our best chance of having the Chicken Tax repealed, and now it’s definitely gone. If you were really hoping to get a brand-new Toyota Hilux this year, I’m afraid you’re either going to have to move or try and pull some legal shenanigans and hope for the best. Just register it as a 1979 Toyota.
Who’s going to know?