Trade War
Chickens and Volkswagens
Last fall, after Washington imposed a 35 percent tariff on imported tires, the Chinese retaliated with a tax on American chicken. If a full-fledged trade war breaks out, it won't be the first time our poultry had an impact on the auto trade.
In the early 1960s, West Germans developed a taste for American chicken. Europe decided to impose a tax on imported chicken to protect domestic fowl from overseas competition. President Lyndon Johnson responded by taxing imports of delivery vans and trucks at a whopping 25 percent, a measure aimed at punishing Germany's Volkswagen. Forty-six years later, most manufacturers build trucks and vans intended for the U.S. market in the United States to avoid the tax.
But Ford figured out a workaround. The American automaker employs 65 workers in Baltimore who perform a simple job: They receive Turkish-manufactured Ford passenger vans from the massive ships that dock in the city's ports. Once the vehicles are safely on American soil, having been imported at the low tax rate of 2.5 percent, Ford employees rip out the brand-new backseats and rear windows. It takes about five minutes per vehicle to turn the passenger vans back into the delivery vans they were always intended to be.
Now the Chinese and the Americans are facing off over chickens and tires. One can only imagine what hoops importers will be jumping through by the year 2055.
