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