Your Sprinter RV cost too much? Blame chickens!

16

Which came first? The Chicken Tax, the Sprinter or the Egg?
A lesson in tariffs and international trade

By Mike Sokol
This is not a political article, and I’m not taking sides. However, I believe that “Those who cannot learn from history are doomed to repeat it.” This is the story of how a cheap chicken in the 1960s changed international trade and how your Sprinter van is currently built. And it’s also a warning that every tariff has repercussions, some good, some bad, and some reaching 50 years into the future in unpredictable ways.

I found this out soon after buying my Sprinter Van. Before you think I’m making up the “Chicken Tax,” here’s the official definition:  “The Chicken Tax is a 25 percent tariff on light trucks (and originally on potato starch, dextrin, and brandy) imposed in 1964 by the United States under President Lyndon B. Johnson in response to tariffs placed by France and West Germany on importation of U.S. chicken. The period from 1961–1964 of tensions and negotiations surrounding the issue was known as the “Chicken War,” taking place at the height of Cold War politics.”
The reason for the Chicken War was that during the 1950s chicken was an expensive delicacy in France, on the order of pheasant or Cornish game hens in the U.S. today. And all was well with French cuisine until the United States started upping their chicken production after WWII. (“A chicken in every pot” campaign, etc.) So what do you do when you have an excess of really cheap chicken you need to sell? Well, you export it to Europe, of course. This flooding of France with cheap U.S. chicken nearly destroyed the French chicken industry, and so the French did battle with the only thing they could do diplomatically. They created a 25% “Poultry Tax” on chickens imported into Europe from the United States.

OK, that makes sense since the 25% import duty would help protect the French chicken industry. But in 1964, President Johnson retaliated by placing a 25% tariff on light trucks, potato starch, dextrin, and brandy imported from Europe into the United States.

But what does that have to do with my Sprinter van? Glad you asked. Since the Sprinter cargo van qualifies as a light truck, when they decided to import it into the U.S. under the Dodge and Freightliner badges, there should have been an extra 25% tariff imposed on it, a substantial tax on a $40,000 vehicle. So the Germans did the only logical thing and found a loophole in the law. While a completely assembled Sprinter van would be taxed at 25%, a Sprinter van “kit” would not be. So every Sprinter cargo van that’s imported into the U.S. is first assembled completely in Germany. Then the engine, transmission and axles are pulled and it’s all put in a box for shipping to the U.S. “unassembled”. The Sprinter kit arrives at a small plant in South Carolina where the process is reversed and the engine, transmission and axles are reinstalled. And voila, instant Sprinter from a box mix.

Think that’s crazy, then consider the Transit Connect Van. They’re the cute little mini-Sprinter delivery trucks you see all over the place. To avoid the 25% Chicken Tax, every one of them starts out as a passenger van when they’re built in Turkey. They have rear windows, a rear seat with seatbelts, and interior padding sufficient to meet U.S. safety laws. But as soon as they arrive in the United States as “passenger” vans, the side windows are replaced with solid panels, the interior padding is shredded, the rear seats are removed to be shipped back to Turkey for recycling into the next Transit Connect Van.

Eventually the tariff on potato starch, dextrin and brandy imported into the U.S. was lifted, but nobody ever got around to reversing the tariff on light trucks imported here.

So which came first? I would say the Chicken Tax, then came the Sprinter vans, followed by the politicians laying an egg.

Read the rest of the story on the Chicken Tax on Wikipedia.


##RVDT1450

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Max
7 days ago

Okay, I don’t understand… your title implies you new Sprinter costs too much because of a chicken tax, yet you go on to say they get around it by “assembling” it in the United States. So, does it cost more or not? 🤪

Ray
8 days ago

Are the French still taxing US chickens?

Stephen Durrett
8 days ago

Thank you for your insight into the Mercedes Sprinter. I heard about the chicken tax but didn’t know the complete story.

David
8 days ago

Great article, but it’s worth noting the Transit Connect van is not a “mini-Sprinter.” Sprinters are made by Mercedes and Transits are made by Ford.

travilenman
8 days ago

I like your WIT…

Deborah Mason
8 days ago

We got our first taste of this kind of thing when we bought a Honda Wagovan in 1986. They came into the US as a “light cargo van” to get around the limit on cars bring imported from Japan. The bars in the back side window were “cargo tie downs”, the back seat was fixed as a straight up “retaining wall” & utilitarian vinyl upholstery. For $30 + a half hour labor, they installed a kit to allow the back seat to recline in 2-3 positions. It was the bargain we needed at the time to allow us to have a Honda.

bill
8 days ago

if I remember correctly Subaru imported their small p/u with seats in the bed to say it was a passenger vehicle

Ken Knutson
8 days ago

It makes sense that the US government would not reverse this. Very few people know about it and of course the US government isn’t about to loose money on the tax so why abolish it? It just makes you wonder how many other taxes (or laws) are out there that should be repealed because they are nonsensical?

David
8 days ago
Reply to  Ken Knutson

The good thing is that Sprinter vans for our market have been made in the US since the 2019 model year. Ford had announcedTransit vans will soon be made in Mexico (with a lot of content coming from the US). That’s a lot of jobs, etc. here. So, maybe the tarrif helped with getting that production moved to here.

Chic Sanders
8 days ago

Not just electricity! You are a multifaceted man with an Engineer’s wit. I enjoy your technical knowledge and now your humor. 

Tommy Molnar
8 days ago

Now THAT’S interesting!

Eric Meslin
2 years ago

There is nothing productive about a tariff. Hopefully this is just a temporary negotiating strategy. Thanks for the eye opening article Mike. We are more of a global economy than ever.

BILL BATEMAN
2 years ago

Thanks for the article … just proves that something new can be learned every day.
Sorry that you’ll be inundated with political wackos for the rest of the day!

Mike Sokol
2 years ago
Reply to  BILL BATEMAN

I don’t do politics on my newsletter or forums. I just delete any political statements or baiting.

Billy Bob Thorton
2 years ago

Gee wiz, tariffs imposed that far back to level The playing field. Who woulda thunk. What’s really interesting is the massive amount of time and money spent, to get around a tax. Sounds productive to me.