The 1960s ‘Chicken Tax’ Shows the Lasting Impact of Tariffs

The U.S. has imposed a 25% tariff on imported trucks ever since President Lyndon Johnson hit back at European levies on American poultry in 1963, less than two weeks after the assassination of President John F. Kennedy.

As the Trump administration pursues a barrage of new tariffs, the longstanding tax on pickup trucks bears witness to the power of high duties to reshape global trade, competition and industry over decades, with effects far exceeding their original purpose.

Like today’s tensions, the dispute that became known as the “chicken war" was punctuated by worries about the trade deficit, accusations of protectionism and threats to cut Europe loose from America’s defense umbrella.

Back then, though, Washington favored lower import duties and imposed the chicken tax only after more than a year of fruitless diplomacy. Johnson’s trade representative “emphasized that the tariff increases weren’t necessarily permanent and could be canceled" as soon as Europe cut its poultry levies, The Wall Street Journal reported at the time.

President Lyndon Johnson imposed the tariff in 1963.

Since becoming president, Donald Trump has introduced a 25% tariff on steel and aluminum, a 25% tax on many goods imported from Mexico and Canada and an additional 20% duty on Chinese products. He has said he would give details of further wide-ranging tariffs, including a potential 25% levy on all light-vehicle imports, on April 2.

Some lessons from the 1960s auto tariff are consistent with the current White House’s America-first agenda, others less so.

Thanks in large part to the chicken tax, virtually all pickup trucks sold in the U.S. are built in North America, and most of them by American brands. General Motors, Ford and RAM owner Stellantis sold 80% of all light trucks in the U.S. last year. (Ad campaigns in the decades since have helped cement American brand loyalty among truck buyers.)

By contrast, overseas products and brands play a major role in the broader auto market, where imports are subject to a 2.5% tariff. Roughly four million cars and sport-utility vehicles were shipped from Europe, Asia and elsewhere last year, accounting for almost a quarter of domestic sales.

But almost nobody pays the chicken tax. While President Trump has touted tariffs as a way to fund other tax cuts, the more they successfully encourage local production, the less money they raise directly for the federal government.

Imports of “motor vehicles for the transport of goods"—the customs category that includes pickup trucks and is mostly subject to the 25% tariff—triggered estimated duties of just $104 million last year, according to official data. Imports of passenger vehicles, taxed at 2.5%, were expected to raise $3.6 billion.

A 25% rate gives companies strong incentives to find workarounds, and the chicken tax has a colorful history of companies engaging in so-called tariff engineering to avoid it.

Subaru imported a small pickup in the 1980s called the Bi-drive Recreational All-terrain Transporter, or BRAT. But it wasn’t a taxable truck, because it had two seats bolted to the open bed, facing backward.

Mercedes-Benz used to make Sprinter vans for the U.S. market in Germany, and then partially disassemble them to be shipped to South Carolina, where they were rebuilt locally. In 2018, with Sprinter sales growing healthily, the company expanded its South Carolina factory to handle the full final assembly process.

Even U.S. companies, the apparent beneficiaries of the tariff, have sought to avoid it. Ford used to import its Transit Connect model from Turkey with seats in the back that were removed when it passed customs, transforming what the company called a “passenger wagon" into a cargo van.

In 2013, U.S. Customs and Border Protection ruled that Ford should be paying the chicken tax, leading to a yearslong legal dispute that was finally settled in 2024. The company agreed to pay $365 million to resolve Justice Department allegations of tax evasion, without admitting liability.

Mexico and Canada have offered a legal route around the chicken tax since the North American Free Trade Agreement went live in 1994, and some pickup trucks sold in the U.S. are now assembled across the border, albeit with many U.S. parts. President Trump has cast doubt on this arrangement, though, recently introducing a 25% tariff on almost all goods shipped from the countries before giving a one-month reprieve to those that comply with free-trade-area requirements.

A Ford factory near Detroit.

Most economists hate tariffs because protected markets are often associated with high consumer prices and limited choice, competition and innovation. The history of the chicken tax bears out some of these criticisms, but not all.

Americans likely have less choice of pickup trucks than they otherwise would, particularly in the midsize segment that is also popular abroad. Kia recently launched its first-ever pickup truck, the Tasman, but has no plans to sell it in the U.S. Mitsubishi doesn’t sell a pickup in the U.S. despite being a big competitor in the segment elsewhere.

For cars and sport-utility vehicles, Asian manufacturers entered the U.S. by shipping models from home in small quantities to test the market. They then invested in local production after attracting a critical mass of consumers. With trucks, the chicken tax led companies to adopt an all-or-nothing approach. Only the largest brands, such as Toyota, took the plunge.

But analysts debate whether Americans are really missing out, given how fiercely the Detroit brands compete with each other in the lucrative pickup segment.

Despite complaints about the high price of trucks in the U.S., like for like they are often more expensive abroad. A 2025 Ford Ranger XL, which starts at roughly $33,000 in the U.S., is priced at the equivalent of around $34,000 in Australia and $37,000 in the U.K.

As for innovation, Tesla’s Cybertruck and Rivian’s R1T have brought cutting-edge technology to the U.S. truck market in recent years.

Even Volkswagen, whose 1950s-era minivans and pickup trucks were the original target of the chicken tax, plans to return to the market with a locally manufactured electric pickup under the historic Scout brand. Last year it started building a $2 billion factory in South Carolina, with deliveries slated to start in 2027.

“On the surface it seems like it’s a protected place," said Tyson Jominy, vice president of data and analytics at J.D. Power. “But the reality under the surface is that there has been a lot of product development and activity flowing into the pickup-truck space."

The trade dispute that triggered the chicken tax started in the summer of 1962, when the creation of Europe’s Common Agricultural Policy triggered an increase in West German tariffs on poultry. Shipments from U.S. farmers to West Germany, which had been booming, fell by more than half in the first six months of 1963.

Then as now, trade conflict was allied with concerns that the U.S. was spending too much on European security. U.S. senators told a German minister that “they didn’t see any reason why they should leave their soldiers in Germany if the country didn’t buy their chickens," then-West German Chancellor Konrad Adenauer recalled in his memoirs.

The eventual U.S. response was deliberately narrow, covering the equivalent of just $300 million of goods in today’s money, including brandy and potato starch as well as goods vehicles. Yet it ended up having a decisive impact on Detroit, which gradually retreated into the profitable truck niche as Asian brands grew in the wider market and gasoline prices fell in the 1980s and ’90s.

While that refuge was helpful at first, it meant Detroit avoided the tough task of matching the competitiveness of Asian manufacturers in smaller vehicles, according to Nick Colas, co-founder of DataTrek Research and a former autos analyst.

The lesson for today? “Even something that seems kind of trivial can have very long-lasting effects," Colas said. “It can be good, it can be bad, it can be good first and bad later. We just don’t know."

The chicken tax had a decisive impact on the fortunes of Ford and other Detroit automakers.