Industry News: U.S. Could Eliminate The Chicken Tax

[William Maley]

William Maley

Staff Writer - CheersandGears.com

August 8, 2013

The Chicken Tax, a fifty year-old tariff put in place to tax 25 percent on all imported trucks could be gone in the near future.

The U.S. is currently in talks currently in negotiations with the the Trans-Pacific Partnership over free-trade agreements. One of the countries in the Trans-Pacific Partnership is Japan, a country that currently imposes strict restrictions on U.S. imports. The U.S. is using the elimination of the Chicken Tax as bargaining chip in the negotiations to hopefully open up and let domestic automakers come in.

“The automakers see it as some leverage to getting other countries to open up their markets. The tariff doesn’t seem to make any sense now, particularly since the industry has globalized, or at least regionalized, but this is what happens with transfer programs, with protectionism, with social safety nets," said Daniel Ikenson, director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.

Cases in point:

• Honda, Nissan, and Toyota build their trucks in U.S.
  
• Ford and for a time Chrysler used a loophole in the Chicken Tax to bring their vans into U.S.
  

The Chicken Tax has also hurt automakers. For example, MINI pulled the Clubvan in the U.S. partly due to the Chicken Tax.

If the U.S. is not successful in their negotiations, the Chicken Tax could stay on the books for another 25 to 30 years.

Source: The Detroit News

William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.

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[G. David Felt]

I would rather they focus on streamlining the tax code, cut the pork out of the budget, reduce the over abundance of military bases around the world and term limits. Two terms for Senators and 6 for house members. This way both parts get 12yrs to make a difference before having to go back to the private sector and their benefits package and retirement perks. All goes away and is folded into Social Security and Medicaid. This way they get the same as the rest of the country. Then they will have inspiration to fix things for good.

[riviera74]

I would rather they focus on streamlining the tax code, cut the pork out of the budget, reduce the over abundance of military bases around the world and term limits. Two terms for Senators and 6 for house members. This way both parts get 12yrs to make a difference before having to go back to the private sector and their benefits package and retirement perks. All goes away and is folded into Social Security and Medicaid. This way they get the same as the rest of the country. Then they will have inspiration to fix things for good.

I generally agree with most of these ideas on principle, but that requires replacing our political class first. Now as for the chicken tax, the real elephant in the room is that the USA is almost unique in our almost laissez-faire free market in automobiles and no one nation does this. Japan (and China) have essentially used the US policy of near free trade to leave economic poverty to join the global middle class. Japan became wealthy (until 1990) because of those same policies. 90% of what is wrong is that other nations protect our industries and the USA does not. They need to change their stripes long before we should ditch the chicken tax.

[G. David Felt]

Riviera74 I do agree with you that it would be nice to have the rest of the world have a more open free market system, but they do fear the US ability to bring things in fast and cheaper than local companies could grow. I think the chicken tax needs to stay on more items forcing them to be built here or pay up.

[thedriver]

Open market nothing, what we need is fair trade. Declare that we will assess a tariff on any product that is equal to what that country assesses us. If we do that no one can complain that we are being unfair or protectionist.

[SoCalCTS]

Keep the chicken tax. It's not like Ford or GM are suddenly going to sell millions of American made vehicles in Europe if the tax situation changes.

[Drew Dowdell]

The problem isn't always tariffs. In the case of Japan, imported cars have to go through hefty inspections that domestically produced cars do not. In China, the companies have to be Chinese based even if they are in joint partnership with a foreign company.

[G. David Felt]

Japan does need to drop their protectionist laws.

[loki]

fair or free trade can't happen in the monetary climate we have.. anyone hear the NPR news (couple weks ago) about how Abe(japan) was inflating the yen and was causing toyota to have that 90+% increase in profits?

if you want honest trade, start looking at the money(replacements) you use everyday.