U.S. Considers Eliminating Chicken Tax
The Detroit Three has long dominated the U.S. truck segment, partly because of the Chicken Tax, which imposes a 25-percent tax on imported trucks. The U.S., however, may consider eliminating the tax if other countries like Japan agree to loosen or discontinue restrictions placed on American-made goods.
The U.S. is currently negotiating free-trade agreements with the Trans-Pacific Partnership, a group of 12 countries including Japan. The U.S. is reportedly using the Chicken Tax, which was enacted 50 years ago, as a bargaining chip for domestic automakers to increase their presence in emerging markets.
Axing the Chicken Tax could benefit American consumers as well. A number of industry analysts claim the tax has contributed to the rise in pickup truck prices in recent years. Since 2005, the selling price of full-size trucks has increased by at least twice the rate of the industry overall, according to The Detroit News. Increased demand for luxury amenities have contributed to the rise in truck prices, but some suggest the lack of competition have played a role as well. That said, it's unlikely the Detroit Three will experience drastic drop in market share should the tax disappear.
In an interview with The Detroit News Daniel Ikenson, who is the director of the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies, said "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."
Toyota and Nissan, for example, build and sell trucks in the U.S. and Ford discovered a loophole that has enabled it to import its Turkish-built Transit Connect to our shores. However, it's a different story for other foreign automakers including Mahindra, which struggled with the Chicken Tax during its unsuccessful attempt to sell its diesel-powered pickup truck in the U.S. Additionally, Mini cites the tax as one of the factors leading to its decision to pull the Clubman commercial van from the U.S. market.
Should the Chicken Tax disappear, what trucks or vans would you like to see roaming U.S. streets? Truck enthusiasts have lusted for the Toyota Hilux and Volkswagen Amarok. Would you want Mercedes-Benz to bring over its Unimog? Sound off below.
Source: The Detroit News