Episode 632: The Chicken Tax : Planet MoneyPresident Trump talks about putting tariffs on foreign cars. But there are already tariffs on auto imports and one got there because of chickens in Germany. This is how trade barriers tend to spread.
German families in the 1960s loved tasty, cheap American-raised chicken that was suddenly coming in after the war. At the same time, Americans loved fun, cheap Volkswagen Beetles. This arrangement was too good to last.
German chicken farmers weren't too happy with American-raised chickens flooding their market, pushing them out or stealing their business. The farmers pressured the German government and the German government started taxing frozen chicken imports. The Germans demanded trade protections — and got them.
The Americans weren't about to sit back and watch Germany raise tariffs on their chicken. America did what countries often do in situations like this. They retaliated with trade protections of their own. America slapped a tariff on trucks.
All foreign vehicles that carried goods, basically pick-up trucks and commercial vans, were taxed at 25 percent.
Today on the show, how a trade dispute over frozen chicken parts changed the American auto industry as we know it.