Since 1964, the United States has upheld the Chicken Tax, which includes protections for light trucks in the U.S. market. Imposed under President Lyndon B. Johnson, the tax remains to this day and has provided cover for U.S. automakers from any foreign truck competition.
Bob Lutz, former General Motors executive, recently spoke about the current state of U.S. trade and tariffs under the Trump administration, and in the conversation, he said the Chicken Tax can likely die off.
His reasoning sits in the U.S. market itself: it’s a highly competitive marketplace, especially in the pickup truck market. Today, General Motors, Ford and Fiat-Chrysler Automobiles face nearly zero competition from foreign automakers attempting to sell light-duty pickups. And automakers that do rival the Big Three’s pickups produce the vehicles in the U.S.
If the Chicken Tax went away, it would likely remain difficult for any automaker to seriously threaten the core competency Detroit has worked tirelessly to build for decades. Automakers, including Ford and GM, have also gotten creative over the years to circumvent the tax, going as far as reassembling cars in the U.S. to avoid the tariff.
The entire conversation over the Chicken Tax comes as Europe proposes reducing tariffs to 0 percent on vehicles. But, the U.S. must also bring its tariffs to 0 percent; President Trump has called for a 25 percent tariff on cars to match Chinese tariffs. The European Union also places higher tariffs on cars exported from the U.S.