If you’re fed up with hearing about the price of eggs, never mind paying for them, here’s
another take on chicken – tariffs. The so-called chicken tax is back in the news as consumers,
government officials here and abroad, and economists try to understand Donald Trump’s ever-
changing tariff policy. Since his return to office, Donald Trump has embarked on an aggressive
tariff agenda, imposing sizeable tariffs on both friends and foes. The often-conflicting rationale
for the tariffs has ranged from punishing countries for what he claims are unfair trade imbalances
to using the tariffs to generate revenue to bringing back jobs to the United States. So, where do
the chicken tariffs come into the discussion and what are they anyway? The chicken tariffs refer
to the 25 percent tariff that was imposed by the United States on imported light trucks in 1964.
First, the elephant in the room. What do imported trucks have to do with chicken? Well, the tariff
on truck imports was a retaliatory tariff imposed by the United States in response to tariffs
assessed by France and West Germany on U.S. chicken exports.
Because the tariff on truck imports remains in place today, it provides insight into the longer-
term effects of tariffs as a policy tool. While truck makers initially tried to circumvent the tariffs
by modifying vehicles just enough to avoid being classified as trucks and then removing the
modifications – often seats bolted into the truck beds – before selling them, over time, most
chose to locate production in North America. While this created jobs, many of those jobs ended
up in either Canada or Mexico, as automakers capitalized on the free trade agreement between
the three countries. The tariffs prompted some foreign producers to abandon the U.S. market,
giving U.S. automakers an advantage. The tariffs also generated some income for the country,
but because most trucks sold in the United States are now made in North America and so are not
subject to the tariff, most of the revenue stream has long since dried up. For consumers, the
tariffs have meant higher prices and less choice, yet they also likely contributed to the
development of a new class of vehicles, the SUV – built on a truck chassis, but with seats,
thereby mostly avoiding the chicken tariff. With such mixed results, you might be wondering
why the United States has decided to start a trade war with multiple countries. Indeed, the back
and forth volley of tariffs has reached the point that it seems that we are now a game of chicken.
Discussion Questions:
- What can we learn from the chicken tariffs? Did they achieve their goal? Why do you think
the policy remains in place today? - Consider some of the recent tariffs imposed by the United States on, for example, imported
steel and aluminum. What are the implications of the tariffs for the U.S. steel industry? How will
U.S. automakers be affected? What do the tariffs mean for U.S. consumers and for workers in the
steel and auto industries? Is it possible to use tariffs to simultaneously generate revenue, create
domestic jobs, and provide competitively priced goods to consumers? Explain.
Sources| Detroit News: https://www.detroitnews.com/story/business/autos/2025/03/17/chicken-tax-tariff-on-imported-pickups-isnt-scaring-this-truck-maker-away/82223622007/; WSJ: https://www.wsj.com/economy/trade/the-1960s-chicken-tax-shows-the-lasting-impact-of-
tariffs-aad04b6a; NY Times: https://www.nytimes.com/2025/03/13/us/politics/trump-trade-war-europe-canada.html; Unsplash: Photo by Ben Cvoro on Unsplash