Posted: JANUARY 31, 2025
The Chicken Tax
How a Poultry Tariff Reshaped America’s Truck Market
Did you know that today’s American pickup truck landscape was largely influenced by a mid-century battle over chicken exports? At first glance, poultry and pickup trucks seem unrelated, but the infamous “Chicken Tax” demonstrates how a single tariff can set off a chain reaction with effects lasting decades.
The Poultry Boom and Europe’s Response
In the late 1950s and early 1960s, America’s chicken farming industry was on a roll. Improvements in breeding techniques, feed composition, and large-scale farming practices practically doubled U.S. chicken output within a decade. With production costs down, the United States found itself with an abundance of affordable poultry — enough to sell internationally at highly competitive prices.
European nations, particularly France and West Germany, took notice as cheaper American chicken flooded their markets, capturing significant consumer interest. Local farmers, feeling the pressure from this influx, lobbied their governments to take action. In response, several countries imposed new tariffs on imported chicken, making U.S. poultry less appealing abroad.
In the late 1950s and early 1960s, America’s chicken farming industry was on a roll. Improvements in breeding techniques, feed composition, and large-scale farming practices practically doubled U.S. chicken output within a decade. With production costs down, the United States found itself with an abundance of affordable poultry — enough to sell internationally at highly competitive prices.
European nations, particularly France and West Germany, took notice as cheaper American chicken flooded their markets, capturing significant consumer interest. Local farmers, feeling the pressure from this influx, lobbied their governments to take action. In response, several countries imposed new tariffs on imported chicken, making U.S. poultry less appealing abroad.
Farmers from Belgium and the other member states of the European Economic Community (EEC) taking over the streets of Brussels in protests. (Nationaal Archief / CC0)
Retaliation: The Birth of the Chicken Tax
The United States government didn’t take these poultry tariffs lightly. In 1963, it introduced countermeasures on select European goods, including brandy, potato starch, dextrin, and crucially, light trucks. This 25% tariff on light trucks became famously known as the Chicken Tax.
At the time, European automakers like Volkswagen were making headway into the U.S. market with vehicles such as the Volkswagen Type 2 van. The new tariff abruptly curbed this momentum; data suggests that European light truck exports dropped nearly by half within a few years.
The United States government didn’t take these poultry tariffs lightly. In 1963, it introduced countermeasures on select European goods, including brandy, potato starch, dextrin, and crucially, light trucks. This 25% tariff on light trucks became famously known as the Chicken Tax.
At the time, European automakers like Volkswagen were making headway into the U.S. market with vehicles such as the Volkswagen Type 2 van. The new tariff abruptly curbed this momentum; data suggests that European light truck exports dropped nearly by half within a few years.
The U.S. Auto Industry: U.S. Factory Sales, Retail Sales, Imports, Exports, Apparent Consumption, Suggested Retail Prices, and Trade Balances With Selected Countries for Motor Vehicles, 1964-81
United States International Trade Commission Publication 1329, December 1982
United States International Trade Commission Publication 1329, December 1982
A “Temporary” Measure That Stayed
Although intended as a short-term retaliation, the Chicken Tax largely remained in place. Even decades later, long after the chicken dispute had faded from daily headlines, the 25% duty on light trucks persisted.
As of 2025, the Chicken Tax still looms large over the pickup and commercial vehicle segment. This policy, originally aimed at protecting U.S. poultry exports, reshaped entire sectors of the automotive industry.
Although intended as a short-term retaliation, the Chicken Tax largely remained in place. Even decades later, long after the chicken dispute had faded from daily headlines, the 25% duty on light trucks persisted.
As of 2025, the Chicken Tax still looms large over the pickup and commercial vehicle segment. This policy, originally aimed at protecting U.S. poultry exports, reshaped entire sectors of the automotive industry.
The Harmonized Tariff Schedule (HTS) sets out the tariff rates and statistical categories for all merchandise imported into the Unites States.
Key Impacts on the Industry
1
Market Share Shifts: With foreign automakers deterred by the high cost of importing light trucks, domestic manufacturers like Ford and GM saw minimal competition in the pickup arena. Over time, this allowed U.S. brands to secure a dominant position. Today, roughly 80% of all new light trucks sold in America are manufactured domestically.
2
Production Strategies and Workarounds: Foreign automakers scrambled to find loopholes. One notable example: Subaru added rear-facing seats in the bed of its BRAT model, allowing it to be classified (and taxed) as a passenger vehicle rather than a truck. While creative, such strategies were short-lived; regulators closed these loopholes one by one.
Ultimately, companies such as Toyota, Honda, and Nissan concluded it was more cost-effective to open factories in North America, avoiding the punitive import duty altogether. As a result, we’ve seen significant investments in U.S. truck manufacturing plants and rising production volumes in states like Texas.
Ultimately, companies such as Toyota, Honda, and Nissan concluded it was more cost-effective to open factories in North America, avoiding the punitive import duty altogether. As a result, we’ve seen significant investments in U.S. truck manufacturing plants and rising production volumes in states like Texas.
3
Effects on Pricing: Over the course of 30 years (1990–2019), the real price of new light trucks in the U.S. increased by around 1.3%, whereas passenger car prices (with lower tariffs) dipped slightly. This pricing gap reflects the long-term impact the tariff has had, not just on consumer choices but also on the broader market dynamics surrounding trucks vs. cars.
Average New Light Truck Price in 2019 was 43% Higher than the Average New Car Price.
U.S. Department of Energy, Vehicle Technologies Office, Average Price of a New Car and Light Truck, 1990-2019
U.S. Department of Energy, Vehicle Technologies Office, Average Price of a New Car and Light Truck, 1990-2019
Why It Matters
The Chicken Tax story illustrates how interconnected global trade truly is. A problem that started in the poultry sector led to retaliatory tariffs affecting automotive imports — resulting in profound shifts for drivers, manufacturers, and consumers. It’s a real-world example of how a targeted trade policy can outlive its original purpose and shape markets for generations.
Even if tariffs may seem like a technical or niche topic, their effects can ripple through everyday life. From what vehicles dominate our roads to the prices we pay at car dealerships, seemingly small decisions in international trade can leave a lasting mark.
The Chicken Tax story illustrates how interconnected global trade truly is. A problem that started in the poultry sector led to retaliatory tariffs affecting automotive imports — resulting in profound shifts for drivers, manufacturers, and consumers. It’s a real-world example of how a targeted trade policy can outlive its original purpose and shape markets for generations.
Even if tariffs may seem like a technical or niche topic, their effects can ripple through everyday life. From what vehicles dominate our roads to the prices we pay at car dealerships, seemingly small decisions in international trade can leave a lasting mark.
Chicken Tax: How a Poultry Tariff Shaped the U.S. Auto Industry
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