What is the Chicken Tax?

Hot honey chicken sandwiches and BBQ chicken skewers are why we can’t have a smaller, imported truck in the United States. Well, okay, that might be stretching it a little. But if you’ve ever wondered why we don't have a wider variety of small pickups in the United States, or why brands like Toyota and Nissan build their trucks in places like Texas and Mississippi, the answer centers around a decades-old trade war involving frozen poultry.

Known as the Chicken Tax, this tariff on light trucks has been in place since 1964, a year marked by the Space Race, Beatlemania, and rising tensions in Vietnam with the passage of the Gulf of Tonkin Resolution. While the name Chicken Tax sounds like a joke or meme (or a follow-up single to the popular wedding dance song), its impact on the American automotive landscape is anything but.

The story of the Chicken Tax begins after the fall of Nazi Germany during World War II. While Europe was rebuilding its infrastructure under the Marshall Plan, the United States emerged as a global technological and industrial powerhouse. The post-World War II era in the United States saw the rise of a robust middle class, as many women who entered the workforce during the war kept their jobs once the men returned home.

With more disposable income, Americans were able to purchase things they had once rationed for the war effort, food being no exception. It was in the middle of both a housing boom and a baby boom that a change in the American diet occurred. Industrial advances in U.S. farming made chicken, once a luxury reserved for Sunday dinners only, affordable and plentiful. By the early 1960s, American chicken was flooding European markets, particularly in West Germany, undercutting local farmers who couldn't compete with U.S. scale and pricing.

European governments, now desperate to protect their own recovering agricultural sectors, began slapping tariffs on American poultry. Certain actors even went so far as to claim U.S. chicken was diseased to discourage European consumers, a tactic Arkansas Senator J. William Fulbright famously and passionately dismissed as propaganda in 1962. According to historical USDA reports, German farmers’ associations accused U.S. poultry firms of artificially fattening chickens with arsenic, while the French government raised concerns that growth hormones could affect male virility.

Fulbright’s commitment to the cause was understandably greater than most, driven by a constituency that included Arkansas farmers. During a NATO meeting in Geneva regarding nuclear armament for European forces, Fulbright interrupted the proceedings to protest the hostility toward American poultry. The late senator and former University of Arkansas president signaled that if Europe wanted the U.S. to commit to its wartime security, it could not then wage an economic war on American agriculture.

With this transatlantic poultry skirmish in full swing, the American automotive industry saw an opportunity to solve a growing problem of its own. While Ford, GM, and Chrysler dominated the domestic market, they were feeling the heat from the Volkswagen Type 2. Most remember the Type 2 as the iconic hippie bus, but in the early 1960s, its pickup and van variants were encroaching on territory held by The Big Three.

The Volkswagen Type 2 was the antithesis of the heavy, V8-powered workhorses built by Detroit. Because its engine was in the rear and the driver sat directly over the front wheels, almost the entire length of the vehicle was usable cargo space. It offered a flat load floor and fuel economy that was nearly double that of its American counterparts. Such efficiency and utility appealed to a wide range of people on Main Street, from business owners and delivery companies to everyday tradespeople. The Volkswagen Type 2 revealed an emerging market for similar vehicles that the crown jewels of Michigan’s automotive ecosystem either didn’t recognize or didn’t care to acknowledge.  

By 1963, the United Auto Workers (UAW) and the Big Three wanted intervention, viewing this "invasion" of German-based VW as a threat to American manufacturing and the established bigger-is-better business model, a strategy that encouraged consumers to trade for newer, and subsequently better, models every few years. As Detroit prospered from the profit margins on larger vehicles, President Lyndon B. Johnson was navigating a political obstacle course; he needed the UAW’s support to pass his landmark Civil Rights legislation but was desperate to avoid a labor strike before the 1964 election, something then-UAW president Walter Reuther was willing to initiate.

Audio tapes from the Johnson White House later revealed a classic quid pro quo. Reuther, whose name now anchors the Archives of Labor and Urban Affairs on the campus of Wayne State University, offered Texas-native LBJ a deal: the White House would stifle Volkswagen and its Type 2 in exchange for the UAW’s backing of the Civil Rights Act and the removal of a potential strike from the table. In early December 1963, Johnson held up his end of the bargain by signing Proclamation 3564, which would take effect on January 7th, 1964 (Johnson would sign the Civil Rights Act into law six months later in July 1964).

Proclamation 3564 was a response to the European approach to American chicken, opening with the phrase “whereas the European Economic Community maintains unreasonable import restrictions upon imports of poultry from the United States.” Despite its original intent, the lasting impact of Proclamation 3564 has been its role as a shield for Detroit’s manufacturing base. It imposed a 25 percent tax (nearly 10 times the average U.S. tariff at the time) on brandy, dextrin, potato starch, and light-duty trucks, effectively pricing the Type 2 out of the market. While the other taxes were eventually lifted, the truck tariff (i.e., the Chicken Tax) remained.

Like any good Wall Street drama, dealing with the fallout of the Chicken Tax became a cat-and-mouse game between automakers and U.S. officials. Manufacturers used a practice known as tariff engineering, designing or modifying vehicles and their components to meet a certain legal definition, even if those modifications were superfluous.

The loveable Subaru BRAT is one such example, an acronym for Bi-drive Recreational All-terrain Transporter. Introduced in the late 1970s, the BRAT was technically a small pickup, which made it a target for the 25 percent tariff. However, Subaru designers got creative by bolting two rear-facing jump seats, complete with seatbelts, into the bed. Since the BRAT now had seating for four, it was legally classified as a passenger car, and thus, subjected to only a 2.5 percent tariff. Safety considerations and winter weather notwithstanding, the unconventional rear seats were among the features that attracted a swath of buyers to the BRAT, a fun little cruiser that doubled as a legal loophole for Subaru.

Between 2006 and 2018, Mercedes-Benz evaded the Chicken Tax on its Sprinter vans by dismantling them after quality testing in Germany. The engines, transmissions, and axles were placed in crates and shipped separately from the chassis. Upon arrival at the Mercedes-Benz Vans facility in Ladson, South Carolina, the components were reassembled. Given how the Sprinter van arrived in pieces, like a giant model car, rather than a finished unit, Mercedes-Benz was able to skirt the Chicken Tax until it could assume full-scale domestic production in 2018.

Although Proclamation 3564 initially protected the Big Three, Ford later needed a loophole of its own at the Port of Baltimore for the first-generation Transit Connect. When the Blue Oval began importing the cargo van from Turkey in 2009, the tax treated it as a light truck. To avoid the 25 percent hit, Ford manufactured every Transit Connect with windows, a rear bench seat, and seatbelts, allowing the vans to enter the U.S. as passenger vehicles.

Once the ships arrived in Baltimore, the Transit vans were driven to a nearby facility. In what seems like a scene from a Gone in 60 Seconds reboot, workers onsite removed the seats and replaced the windows with panels. Despite adding to Ford’s per-unit cost, the retrofitting expense was still lower than the Chicken Tax. Ford continued the process until 2013, when the U.S. government ruled that the Transit Connect was intended for cargo, not passenger, transport. This deliberate misclassification by Ford led to a $365 million settlement in 2024 for violating the Tariff Act of 1930, the legal framework that enforces the Chicken Tax.

Today, the effects of the Chicken Tax are contrasted against the desire for affordability and personalization in the truck world. The Ford Maverick, Hyundai Santa Cruz, and Honda Ridgeline come to mind as strong alternatives to full-size pickups, each with trim levels that cater to buyers who want their trucks to stand out. Ford has the low-rider-inspired Maverick Lobo, Hyundai offers the rugged XRT trim for the Santa Cruz, and Honda has the ever-popular Ridgeline Black Edition.

Meanwhile, the Slate truck embraces a "blank canvas" philosophy to meet this growing demand for style, value, and versatility. First announced in late 2024 and formally revealed in early 2025, Slate generated immediate buzz for its bare-bones, sub-$30,000 electric platform that encourages owners to add their own 3D-printable accessories or SUV conversion kits. Yet, even this promising newcomer isn’t exempt from the long arm of Proclamation 3564, as Slate trucks are engineered in Michigan and produced in Warsaw, Indiana.

Although the tariffs on potato starch, brandy, and dextrine in Proclamation 3564 were eventually removed, as it stands now, a potential repeal of Item 945.69 (i.e., “automobile trucks”) in the proclamation seems unlikely. Any attempt to suspend the Chicken Tax would likely face bipartisan resistance, as both parties view it as a safeguard for American manufacturing jobs connected to the domestic production of profitable trucks and SUVs.  

From an era of Beatlemania and the Rolling Stones, the Space Race and the IBM System/360, emerged a protective measure for farmers and factory workers that, with its informal name of “Chicken Tax,” seems like a goofy Cheezburger meme. Even still, Proclamation 3564 continues to influence the very fabric of American automotive design, manufacturing, and retail, and will likely continue doing so for generations. In the world of international trade, or perhaps more locally among us truck enthusiasts, it turns out there is nothing quite as permanent as a temporary tax on a delicious bird.