Does the “chicken tax” encourage people to buy bigger trucks?

The ‘chicken tax’ is a 25% tariff on imported light trucks that was first imposed in 1964, in response to tariffs levied by some European countries on US poultry products – d where his name. Aside from the stupidity of the name, the tariff affects the American automobile market. But how much responsible for American consumers buying bigger trucks? The answer is not as clear as some think.

It is true that foreign trucks are usually smaller than those sold in the United States, and the price no doubt prevents them from reaching US customers.

But evidence suggests that pricing, while far from ideal, isn’t what drives interest in large pickups. Some overseas manufacturers have found ways to circumvent the chicken tax. Subaru’s Kidfor example, was a van with built-in seats in the back, thus classifying it as a passenger car.

Even domestic manufacturers, such as Ford, have engaged in tactics to avoid the tariff. For years, Ford Transit Connect was built overseas with seats and therefore considered a passenger car. Once brought to this country, the seats were removed and destroyed, allowing it to be used as a truck.

And of course some foreign manufacturers have built factories in this country and trucks built there are not subject to the tariff. Yet these trucks, like the Toyota Tundra, are of similar size trucks produced by domestic manufacturers.

If people only wanted to buy small trucks, domestic manufacturers would build them and sell them. The increase in the size of vans is therefore probably more related to driver demand.

Why would American drivers want big trucks? They may be perceived as safer for the driver and passengers, although the the reverse is true for those outside the truck. In addition, gasoline is much cheaper in the United States than in Europe. Currently, gas in the United States sells for about $3.50 per gallonwhile prices in Europe vary $5 to $8 per gallon. This means that for the same number of kilometers driven, Americans can afford to use automobiles that consume more gasoline.

Another factor beyond the chicken tax is the average enterprise fuel efficiency (CAFE) standards that manufacturers must meet with their entire fleet of vehicles. CAFE standards have always been lower for trucksand since 2011 the standard is based on the vehicle footprint. This means that large trucks have lower mileage requirements than small trucks. Without this change, manufacturers might not have been able to produce larger trucks while meeting CAFE standards.

Tariffs in general hurt consumers, and the chicken tax is no exception. Repealing the tariff would introduce more competition into the automotive industry and provide consumers with more choice.