What Is the Chicken Tax?

The Chicken Tax is a 25% tariff on light trucks imported to the U.S. The United States imposed the tariff in 1964 through an executive order issued by President Lyndon Johnson, in retaliation against European tariffs on American chicken imports. In the decades since then, trade barriers have fallen, and the average U.S. tariff rate on industrial imports stands at 2% as of 2024. But the Chicken Tax still stands.

The original executive order slapped a 25% tariff on potato starch, dextrin, and brandy, as well as light trucks. In the intervening decades, the tariff was removed from all but imports of light trucks. The Chicken Tax is also known as the Chicken Tariff.

Understanding the Chicken Tax

Industrial farming methods developed in the U.S. in the years following World War II led to a vast increase in the production of chicken, and production efficiencies led to lower prices. Once a treat reserved for a Sunday family dinner, chicken became a staple of the American diet. And there was plenty of surplus chicken for export to Europe. According to a 1962 article in Time magazine, chicken consumption rose 23% in West Germany in 1961.

A Farmers' Standoff

Around the same time, Europe was still struggling to recover from World War II, and farmers in Europe complained that American farmers were cornering the chicken market and driving local producers out of business. By the end of 1961, France and Germany had placed tariffs and 澳洲幸运5官方开奖结果体彩网:price controls on birds from the U.S. By the beginning of 1962, U.S. businesses began complaining they were losing sales. At the end of the year, they estimated they had lost 25% of their sales due to European intervention in the chicken market. European and U.S. diplomats tried without success through 1963 to reach a trade agreement on chicken.

About Cars and Chickens

Meanwhile, the American 澳洲幸运5官方开奖结果体彩网:auto industry was suffering a trade crisis of its own. Imports of Volkswagen cars surged in the early '60s as Americans embraced the Beetle and its cousin, the Type 2 van. The situation was dire enough that U.S. automakers and the United Auto Workers (UAW) union brought the issue of German auto imports to the presidential bargaining table.

The UAW had significant leverage: At the time, President Johnson had been trying to persuade Walter Reuther—president of UAW—not to call a strike just before the 1964 election. The president also wanted union support for his civil rights agenda. He got what he wanted in return for including light trucks in the Chicken Tax. Volkswagen sales of trucks and vans in the U.S. plummeted.

The Chicken Tax Today

Lobbying by the auto industry has kept the tax alive through to the present. That is arguably why American-made trucks still dominate truck sales in the U.S. That being said, it must be noted that many of those and other vehicles are manufactured in Mexico or Canada, both of which may receive preferential tariff treatment when complying with specific requirements under the United States-Mexico-Canada Agreement (USMCA).

The Bottom Line

The Chicken Tax refers to a 25% tariff levied on light trucks imported into 🎃the U.S. The tariff has its roots in trade tensions of the 1960s. In this time, European nations began imposing tariffs on American poultry imports. In retaliation, the U.S. imposed a 25% tariff o🍸n potato starch, dextrin, brandy, and light trucks. Today, the tariff on light trucks is the only element of the Chicken Tax that still remains.