The so-called “chicken war” of the 1960s continues to illustrate the peculiar rationality of protectionism and collective choices. It was revealed earlier this week that the U.S. government and the government of South Korea had agreed to maintain a 25 percent tariff on South Korean light trucks (pickups and vans) that was originally part of the “chicken tariff,” also called the “chicken tax,” introduced more than half a century ago. (See Kwanwoo Jun, “U.S., South Korea Strike Trade Deal; Seoul Exempt From Steel Tariffs,” Wall Street Journal, March 26, 2018; and “U.S. Wins ‘Modest’ Trade Concessions from South Korea,” March 27, 2018.)
Two days later, President Trump suggested that he may “hold up” the agreement to exert pressure on the South Korean government in its peace talks with its North Korean counterpart (Rebecca Ballhaus, “Trump Says He Might Hold Up South Korea Trade Talks to Pressure the North,” Wall Street Journal, March 29, 2018). This further use of trade as a political weapon only adds to the strange history of the chicken tax.
The Chicken Tax, a History
In the case of the chicken tariff on light trucks, the main victims were and remain businesses and ultimately their customers.
In 1962, the European Economic Community (precursor of the European Union) doubled its customs duty on foreign poultry. The U.S. government retaliated with a tariff on brandy and a couple of food products (potato starch and dextrin). The American automobile industry, which was starting to feel the heat of European competition, jumped on the bandwagon and determined that a world-wide tariff on light trucks be included among the chicken tariffs. The retaliatory tariffs were eventually lifted, except for the light truck tariff, which has survived up to this day as the only remaining chicken tariff. (See this Feature Article for a Useful Summary; Doug Irwin mentions the episode in his recent Clashing over Commerce: A History of US Trade Policy.)