I say “I learn something new every day” all the time. Because I do.
With skyrocketing fuel costs, I have begun to do research on more fuel efficient ways to deliver product to my customers. I live in a rural area, so we are forced to reach out and get the business. I work about a sixty mile radius.
I came upon the Ford Transit Connect. This is an interesting vehicle because of the relatively low initial cost and the 27 mpg on the highway. I did a bit of cocktail napkin math and this vehicle would pay for itself in fuel savings alone in about two years when comparing it against some of my gas guzzling diesel trucks.
While doing research on this vehicle, I discovered what the Chicken Tax was. I read about it on wiki.
To circumvent the 25% tariff on imported light trucks, Ford imports all Transit Connects as passenger vehicles with rear windows, rear seats and rear seatbelts. The vehicles are exported from Turkey on cargo ships owned by Wallenius Wilhelmsen Logistics, arrive in Baltimore, and are converted into commercial vehicles at WWL Vehicle Services Americas Inc. facility: rear windows are replaced with metal panels and rear seats removed (except on wagons). The removed parts are then recycled. The process exploits a loophole in the customs definition of a commercial vehicle. As cargo does not need seats with seat belts or rear windows, presence of those items exempts the vehicle from commercial vehicle status. The conversion process costs Ford hundreds of dollars per van, but saves thousands over having to pay the chicken tax. Partly because of this, only the long-wheelbase, high roof configuration is exported to North America. In most places, the high-roof Transit Connect, like most Ford Econoline vans, is unable to access multi-story parking because of its height (6′-6″).
I understand what was written, but was baffled as to why on earth a tariff on light trucks would be called a Chicken Tax.
I got curious, so I ran the wiki on the Chicken Tax.
The Chicken tax was a 25% tariff on potato starch, dextrin, brandy, and light trucks imposed in 1963 by the United States under President Lyndon B. Johnson as a response to tariffs placed by France and West Germany on importation of U.S. chicken. The period from 1961–1964 of tensions and negotiations surrounding the issue, which took place at the height of Cold War politics, was known as the “Chicken War”.
Eventually, the tariffs on potato starch, dextrin, and brandy were lifted, but over the next 48 years the light truck tax ossified, remaining in place to protect U.S. domestic automakers from foreign light truck production (e.g., from Japan and Thailand). Though concern remains about its repeal, a 2003 Cato Institute study called the tariff “a policy in search of a rationale.”
As an unintended consequence, several importers of light trucks have circumvented the tariff via loopholes—including Ford (ostensibly a company the tax was designed to protect), which currently imports the Transit Connect light trucks as “passenger vehicles” to the U.S. from Turkey and immediately shreds portions of their interiors in a warehouse outside Baltimore.
I guess there is no real point of this post, other than to point out that yesterday’s thing that I learned was an interesting one. I now know what the Chicken War is, and also know what the Chicken Tax is.