The Chicken Tax

Ever wonder why the biggest market for pick-up trucks (that’s us, the U.S.) has so few trucks available?

Yes, yes, there are the big ones – mostly made by the Big Three. But how come the others – smaller brands, smaller trucks – have been so reticent about cashing in on this most lucrative (highest profit margin per vehicle) segment?

Could it be the “chicken tax”?

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It’s the tax – the tariff – that makes it much more expensive to bring a truck to market in the U.S. that was not made in the U.S.

It was signed into law back in 1963 by Lyndon Johnson as a retaliatory measure directed at France and West Germany, which had imposed tariffs of their own on the importation of U.S. chicken. Hence the name. The measure hit back with tariffs on potato starch, brandy and light trucks imported to the United States, with the object of making all of them more expensive to import.

How much more expensive? How about 25 percent more expensive. Which makes them less profitable to sell here.

Car and Driver All Access Check Amazon for Pricing. Which explains why – in general – they’re not sold here.

Including, ironically, some “domestic” models like the Ford Ranger. Which is a Ford, but no longer made in the USA – and so subject to the tariff. So Ford sells the Ranger pretty much everywhere except here.

But mostly, the tariff affects foreign-brand (as well as foreign-made) medium and compact-sized models like the Toyota HiLux, which is smaller than the Tundra Toyota sells here (and which is made here; now you know why) and also the Mitsubishi Triton, the Mazda B-Series and the new VW Amarok.

Those are just a few of the models most Americans have never heard of – let alone ever test driven.

Popular Mechanics All ... Check Amazon for Pricing. And it’s not just that American buyers are denied these choices. The cloistered market is less competitive as a result – which means, less innovative. It’s no accident that none of the “majors” – especially GM, Ford and Chrysler (now Fiat-Chrysler) sell a compact truck here. Why should they? There’s no competitive pressure to offer them. Despite the huge demand for these vehicles world-wide (and – formerly – here, too).

Toyota, for instance, has sold more than 16 million HiLuxes.

That’s a lot of trucks.

A lot of potential profit, too.

Popular Science Buy New $5.00 (as of 07:45 EDT - Details) But when Uncle takes the profit out of the sale, the incentive to sell tends to wilt.

Some manufacturers have taken the radical step of moving operations here. Opening assembly lines in the United States. Which end-runs the tariff because the truck is now considered a “domestic” rather than an import – regardless of the brand on the fender.

This is the real reason why Honda built a plant in Alabama to build the Ridgeline – the company’s first U.S.-available pick-up. And why Toyota built a plant in Texas (truck central) to build the full-size Tundra. Nissan’s Titan pick-up is built in Canton, Mississippi – not Hiroshima, Japan. (Nissan was the first foreign automaker to unbox operations here – in Smyrna, TN, back in 1983 )

And so on.

If you check into it, you’ll find that all of the currently available “import” brand pick-ups are actually made in the USA.

Which is why there are so few – relatively speaking – “import” brand pick-ups available for sale in the USA.

Currently, there are just two medium-sized ones (the Nissan Frontier and the Toyota Tacoma) and two large (1500 series) models (the Nissan Titan and the Toyota Tundra).

That’s it. The smaller outfits can’t afford to build a whole new plant just to sell a new truck. Especially when they already have a plant. But it’s located outside the U.S.

Enter the tariff. Or build a second plant (here) and double their capital costs.

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