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Frozen Chickens Killed Detroit. Discuss.

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creative commons - flickr.com: http://www.flickr.com/photos/roboppy/1478522323/

creative commons - flickr.com: http://www.flickr.com/photos/roboppy/1478522323/

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Ask your average Toyota Prius owner or green-car geek about the "chicken tax," and you'll likely get a blank stare.

Only those of us who've followed the industry for far too long--or who crave some of the cool small trucks offered in Europe and Asia--know the story behind this infamous piece of legislation.

But a blog post by Harvard professor Robert Lawrence, who specializes in international trade, proposes that the "chicken tax" is actually what killed Detroit, by insulating it from real competition in light-duty trucks for 40 years.

Profits from hundreds of thousands of Ford F-150 and Chevrolet Silverado pickups, he argues, stayed disproportionately high because any truck built outside North America had a 25-percent tariff slapped onto its price (versus just 2.5 percent on cars).

Addicted to that easy money, Detroit stopped paying attention to passenger cars. Which is easy to believe if you've driven a 2009 Dodge Caliber or 2009 Chevrolet Cobalt, neither of them remotely competitive with the best compacts from Honda or Toyota.

It all started in 1962, when the European Common Market barred access to US frozen-chicken imports on the grounds they were devastating German producers. After diplomacy failed, President John F. Kennedy Jr. imposed a tax aimed at Volkswagen Kombi panel vans and pickup trucks in January 1964.

Tariffs can't target individual products, so the rule applied to imports of all non-North American trucks. Exit the VW Kombi and a raft of British vans and pickups and French camionettes.

While the scope of the law narrowed somewhat in later years, it led to bizarre distortions. The most famous may be the two rear-facing seats in the bed of the 1978-87 Subaru BRAT, changing it from a two-seat pickup truck to an open-air passenger car.

The latest company to take on the chicken tax is Mahindra & Mahindra, the Indian company planning to sell diesel-powered small pickup trucks in the States this fall through Global Vehicles. Historians note, however, that automakers and importers have tried for more than four decades to kill the tariff.

None has succeeded.

Subaru BRAT GL by Flickr user ifixfones1

Subaru BRAT GL by Flickr user ifixfones1

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[SOURCE: Dani Rodrik's Weblog, Autoblog Green; PHOTO of Subaru BRAT by Flickr user ifixfones1]

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Comments (7)
  1. "amazing"

    Thanks John....truly amazing. Another story of our federal government at work and a prime example of the Law of Unintended Consequences.
    Burt
     
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  2. "skeptical"

    Imports in the 60s were a niche market. Domestic production/design quality was poor thru the 70s & 80s but the avg. American still would've bought U.S. if high quality imports were priced comparably. Culturally we weren't yet prepared to accept foreign cars on a grand scale. Some of this had to do with the WWII generation's reluctance to buy/condone German/Japanese. It'd take 20-something years from the Kennedy administration for the desirability of imports to get such a hold.
     
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  3. "Not true on the coasts"

    @excuse: Foreign cars had 10% of the US market by the late 1960s, led by VW, then various British, French & Italian makes.
    The Japanese had a foothold in CA by the mid-1960s. Japan sold more cars in the US (70,500) than the British (68,000) in 1967. Toyota, Datsun, Mazda & Honda soon overtook VW.
    Culture depends where you live. “Buy American" slogans lasted into the 1990s in the Midwest and South, but your statement isn't true for the coastal areas that pioneer US automotive trends.
     
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  4. Wow, 70,500 Japanese cars. John, though you could make a good argument on velocity of growth in foreign car sales...

    Ford alone sold 70,500 Falcons. Between January and April of 1966! Comparing Japanese to British car sales for 1967 in the US is akin to comparing scraps to leavings for the individual OEM's. What the heck, your stats by themselves go a long ways toward proving the point made above @ another excuse' comment.
     
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  5. The blindness & lack of perspective in that precise comparison--"We sell more cars in a month than those silly foreigners sold all year!"--is precisely what led Detroit into 30 years of decline that culminated in the collapse of two of its three companies. IMHO, anyhow.
     
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  6. Okay, John, someone patiently and empirically shows you that your comment about the size of the imported vehicle market was either taken by you way out of context or, as noted by others already, or you've deliberately been misleading about the actual numebers.

    In the end, imports were still very low and that's a fact. The problems the America OEMs had more than 40 years after this don't make your comparison valid at all. The fact that imports were low, when you implied they were high, doesn't prove anything about why the American OEMs struggled.

    Because that would actually take thought and involve discussion of various issues, not an angry moderator being corrected, losing his temper, then attacking the messenger for no reason.
     
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  7. I was amazed when I found out what Ford Transit Connects go through. They all arrive in port with rear seats and side windows, then go straight into a warehouse where the glass and seats are removed.
    It's gotten a bit obvious the metal plates on the side doors weren't painted at the same time as the rest of the van, they are bit yellower in the sun.
     
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