New Trade Deal Could Mean Influx of Foreign Trucks
For the average American consumer, the selection of pickup trucks may seem somewhat scarce. Although smaller trucks like the Toyota Tacoma have increased in popularity, even more small trucks are being produced overseas and never make a debut in the United States. Interestingly, it’s all due to one 1963 law — the chicken tax.
The so-called “chicken tax” was signed into law by President Lyndon Johnson as a retaliatory measure. At the time, France and West Germany had recently imposed tariffs on the importation of American chicken, so naturally, Johnson established his own 25 percent tax on potato starch, brandy and light trucks.
In subsequent years, Japanese manufacturers did their best to avoid the tax, by exporting part of the pickup truck composed of the cab and chassis, leaving off the truck bed or box. When the vehicles arrived in the U.S., they would then be fitted with a cargo box. The attempt to exploit these loopholes continued for more than two decades, but today foreign brands like Toyota and Nissan instead built plants stateside to avoid such tariffs — but at a hefty price.
The tax puts the biggest burden on foreign-brand and foreign-made medium and compact-sized trucks, such as the Toyota HiLux, the Mazda B-Series and the Volkswagen Amarok. Because these trucks are subject to a 25 percent tax, they never make it to U.S. consumers. And due to this shrinking of the small truck segment in the U.S., the market has seen less outside pressure for local manufacturers to innovate as vigorously.
But the chicken tax may soon be seeing the chopping block. With recent trade deals now in place, including the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), it is likely that the tariffs will be repealed.
Truck lovers may be rejoicing at the thought of new, smaller pickups becoming available, but trade watchers and industry experts concede that a barrage of new pickups is unlikely, as the tariffs will probably be repealed gradually over the course of years, or even decades.