The TPP was signed today for better or worse. Some Americans may lose their truck manufacturing jobs, but it may make small trucks cheaper for consumers.
The Trans Pacific Partnership Is A First Step To Cheap, Small Pickups In The U.S.
I am talking about the Chicken Tax, implemented by LBJ as some cold-as-ice revenge on France and Germany back in the ‘60s. France and Germany had the nerve to put a tariff on American chickens going into their countries, so LBJ and the UAW’s Walter Reuther hit them with a 25% import duty on potato starch, dextrin, brandy, and small pickups.
Now Korea hasn't signed on yet, but it could in the future -- it wants to. All the sudden Asian trucks could make a big play to move into America, while Eurpoean trucks are still restricted. How fun. Let's play in the truck game, and the Europeans aren't invited.But that was half a century ago. In the meantime, the Chicken Tax has done much more to mess with the American auto market than anything else. Automotive News, interviewing former head of Hyundai in the U.S. John Krafcik, explains how the tax helped dumb down this country’s biggest car segment.
To sell a pickup truck in America while avoiding the Chicken Tax, a truck has to be built in the America, too. And for a foreign carmaker, that means building a new factory to build the truck. That’s not cheap. Krafcik puts the cost in the billions. With such a big investment, the foreign carmaker has to be sure it can recoup that initial cost, and that means they play things safe and avoid risk. So they invariably choose to build full-size trucks, as full-size trucks are the most common, profitable trucks in the U.S. They are the safest bet.
Krafcik elaborated, stating, “I think what is lost the most is low-volume experimentation and innovation in pickups. As soon as you get to that level of investment, the risks become so great that the solutions become fairly mainstream.”
The Trans Pacific Partnership Is A First Step To Cheap, Small Pickups In The U.S.