The Chicken Tax: How a 60-Year-Old Poultry Dispute Still Shapes America’s Love Affair with Trucks

Have you ever wondered why pickup trucks dominate American roads while smaller more efficient trucks are nowhere to be seen? Or why Ford F-150s have been America’s bestselling vehicle for decades? The answer might surprise you – it’s all because of chickens!

Yes, you read that right Chickens

I’m about to take you on a fascinating journey through one of the strangest trade policies still affecting our daily lives: The Chicken Tax. This 25% tariff on light trucks imported to the U.S. has shaped our automotive landscape for over 60 years, and chances are, you’ve never even heard of it.

What Exactly Is The Chicken Tax?

The Chicken Tax is a 25% tariff (that’s a fancy word for import tax) placed on light trucks that are imported into the United States It’s been around since 1964, making it one of the longest-standing trade policies still in effect today

But wait – why on earth is it called the “Chicken Tax”? Well, the story is kinda wild.

The Poultry Problem: How It All Started

Back in the early 1960s, American farmers got really good at raising chickens. Like, REALLY good. Thanks to industrial farming methods developed after World War II, U.S. chicken production exploded, and prices dropped dramatically.

Suddenly, chicken wasn’t just for Sunday dinners anymore – it became an affordable everyday meal for Americans. And we had TONS of extra chicken to export to Europe.

European farmers, still struggling to recover from World War II, weren’t too happy about this flood of cheap American chicken. A 1962 Time magazine article noted that chicken consumption in West Germany rose 23% in 1961 alone, mostly from American imports.

European farmers complained that American farmers were taking over the market and pushing them out of business. By late 1961, France and Germany had imposed tariffs and price controls on U.S. chickens.

American poultry producers were losing their minds (and money). By the end of 1962, they estimated they’d lost about 25% of their sales due to European intervention.

The Perfect Storm: Chickens Meet Cars

At the same time as this chicken drama was unfolding, the American auto industry was having its own crisis. Imports of Volkswagen cars (especially the Beetle and Type 2 van) were surging in the early ’60s.

President Lyndon B. Johnson was caught in the middle of all this. He was trying to:

• Resolve the chicken dispute with Europe
• Help the struggling American auto industry
• Keep the United Auto Workers (UAW) from striking before the 1964 election
• Get union support for his civil rights agenda

Talk about juggling multiple problems!

The Retaliatory Strike: Proclamation 3564

On December 4, 1963, President Johnson issued an executive order called Proclamation 3564. This order imposed tariffs on several European goods, including:

• Potato starch
• Dextrin
• Brandy
• And most importantly, light trucks

The tariff went into effect on January 7, 1964. This was America’s way of saying, “You tax our chickens, we’ll tax your trucks!”

The Aftermath: A Tax That Outlived Its Purpose

Here’s where things get interesting. Over time, all the other tariffs from that executive order were eventually lifted or reduced. But the 25% tariff on light trucks? It’s STILL HERE, over 60 years later!

Volkswagen sales of trucks and vans in the U.S. plummeted almost immediately. American automakers quickly realized this tariff gave them a huge advantage in the truck market, and they’ve lobbied hard to keep it in place ever since.

Why Does The Chicken Tax Still Matter Today?

You might be thinking, “OK, interesting history lesson, but why should I care about some old tax from the ’60s?”

Well, the Chicken Tax has had profound effects on our automotive landscape that we still see today:

1. American Truck Dominance

The most obvious impact is that American-made trucks still dominate truck sales in the U.S. The Ford F-150 has been America’s best-selling vehicle for decades, making Ford approximately $10,000 in profit PER TRUCK.

2. Limited Foreign Competition

The 25% tariff (which is TEN TIMES higher than the import tax on regular cars) effectively eliminated most foreign competition in the light truck market. This limited consumer choices and kept prices higher.

3. Death of the Mini-Truck

Remember those cool little compact trucks from the ’80s and ’90s? In 1985, mini-trucks made up about 25% of pickup trucks sold in the U.S. By 2010, they were completely gone from the market. The Chicken Tax made it too expensive for foreign manufacturers to compete in this segment.

4. Manufacturing Shifts

The tax created some weird workarounds. For example, foreign manufacturers started building assembly plants in the U.S. to avoid the tariff. Others engaged in “tariff engineering” – modifying vehicles or importing them in parts to get around the tax.

5. Environmental Impact

With less pressure from more efficient foreign trucks, American manufacturers focused on building bigger, more profitable trucks rather than improving fuel efficiency. This has contributed significantly to higher emissions.

The Chicken Tax in Today’s World

Despite being a relic from a bygone era, the Chicken Tax continues to influence modern trade policy and the automotive industry.

The tariff has created this weird situation where the U.S. automotive market looks very different from the rest of the world. Other countries have a much wider variety of small, efficient trucks available to consumers.

Here in America, we’ve ended up with massive vehicles that are often overkill for most people’s needs. Studies show that 70% of pickup owners go off-road once a year or less, 75% tow something once a year or less, and 35% use the truck bed once a year or less.

Basically, most people buying these huge trucks don’t actually NEED huge trucks!

The Light Truck Loophole: Adding Fuel to the Fire

The Chicken Tax isn’t the only policy that’s shaped our truck-heavy landscape. Another major factor is the “Light Truck Loophole” in our emissions regulations.

When the U.S. government created Corporate Average Fuel Economy (CAFE) standards in the 1970s, they divided vehicles into two categories: “passenger cars” and “light trucks.” Since light trucks were mostly used as work vehicles back then, they were subject to more lenient fuel economy and emissions standards.

But today, 80% of new vehicle sales are categorized as light trucks, even though they’re mostly used as passenger vehicles! This has created a situation where:

• SUVs and pickups are held to lower emissions standards
• Larger vehicles actually face EASIER standards than smaller ones
• Manufacturers are incentivized to make bigger vehicles

The Hummer Deduction: More Subsidies for Big Trucks

As if the Chicken Tax and Light Truck Loophole weren’t enough, there’s also Section 179 of the Internal Revenue Code, nicknamed the “Hummer Deduction.”

This tax provision allows business owners to immediately deduct the value of a light truck weighing over 6,000 lbs that is used for business at least half the time.

So if you’re a realtor showing houses, why buy a Toyota Camry when you can get a massive Cadillac Escalade with a $25,000 tax discount? Even luxury brands like Bentley and Porsche make vehicles that qualify!

This has encouraged manufacturers to add weight to their vehicles just to cross that 6,000 lb threshold for tax benefits.

The Impact on Our Roads, Wallets, and Planet

All these policies have had serious consequences:

Safety Concerns

The average new car in 2022 weighed more than two tons – that’s 1,000 lbs heavier than the average car in 1980! These bigger vehicles are deadly – light trucks are 2-3 times more likely to kill pedestrians than smaller vehicles and 55% more dangerous to cyclists.

Environmental Damage

SUVs were the second-largest contributor to the increase in global carbon emissions from 2010 to 2018, ahead of heavy industry, trucks, and aviation. Between 2020 and 2021, the average new vehicle’s fuel economy stayed at a dismal 25.6 miles per gallon.

Economic Costs

Bigger vehicles cost more to buy, more to fuel, and more to maintain. They also cause more damage to roads and infrastructure. One study estimated that fuel economy improvements between 1980 and 2006 would have been more than tripled if vehicles hadn’t seen such growth in weight and power.

Is It Time to Pluck the Chicken Tax?

Many experts argue that the Chicken Tax has outlived its usefulness. Critics point out that it:

• Limits consumer choice
• Keeps prices artificially high
• Stifles innovation
• Protects an industry that no longer needs protection

Proponents, however, argue that it:

• Protects American jobs
• Ensures a strong domestic auto industry
• Prevents foreign manufacturers from flooding the market

What’s the Future of the Chicken Tax?

So will the Chicken Tax ever go away? It’s tough to say. The automotive industry has powerful lobbying influence, and the tax has become deeply embedded in our economic ecosystem.

Some trade negotiations have discussed phasing it out, but so far, it remains firmly in place. The auto industry continues to profit handsomely from the protection it provides.

What Can We Learn From The Chicken Tax?

The Chicken Tax is a fascinating example of how a temporary retaliatory measure can become a permanent fixture with far-reaching consequences. It shows how policies created for one purpose can end up shaping industries and consumer behavior in ways no one could have predicted.

It’s also a reminder that our choices as consumers are often influenced by invisible policies and regulations that we know nothing about. The next time you see a massive pickup truck rolling down the street, remember – you’re seeing the lasting legacy of a chicken dispute from the 1960s!

Wrapping It Up

So there you have it – the strange and fascinating story of the Chicken Tax. What started as a trade spat over poultry has shaped American roads, influenced global manufacturing, affected environmental outcomes, and impacted safety for generations.

I find it kinda mind-blowing that something so random as a chicken dispute could have such long-lasting effects on what we drive. It just goes to show that in our interconnected global economy, even the smallest policies can have the biggest impacts.

What do you think? Is it time to finally get rid of the Chicken Tax? Or does it still serve an important purpose in today’s world? I’d love to hear your thoughts in the comments below!

Until next time, keep an eye out for those big American trucks on the road – now you know the clucking reason they’re everywhere!