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New Free-Trade Agreement May End "Chicken Tax"

Motor Trend logo Motor Trend 6/30/2015 Megan Stewart

The 25-percent tariff placed on imported commercial vans and pickup trucks, often referred to as the "chicken tax," is under fire. The Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership are closer than ever to becoming a reality. This deal will create a 12-nation free-trade bloc to encompass nearly 40 percent of the world's economy. Both deals would eliminate the tax.

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Trade barriers between the European Union, the U.S., and Pacific Rim nations would be lowered to align regulations. With both groups removing the chicken tax, it may seem detrimental to current U.S. production operations. The tax motivated foreign automakers to build plants and factories in the 'States and gave domestic automakers more of an advantage.

2014 Volkswagen Amarok Canyon Front Three Quarter View 1© Provided by MotorTrend 2014 Volkswagen Amarok Canyon Front Three Quarter View 1

However, an influx of new, smaller pickups wouldn't happen overnight. The tariff would be gradually taken away over several years, possibly decades. As of now, only six automakers offer pickups here in the U.S., but with the rolling back of the chicken tax, foreign-built trucks like the Volkswagen Amarok might have a chance at coming stateside. If Thailand ends up joining the Trans-Pacific Partnership, the Toyota Hilux and global Ford Ranger could be on the table too. But industry experts and trade watchers claim that the process will take time, and it will be later rather than sooner before the U.S. can get its hands on imported pickups.

With the gradual dissolution of the chicken tax, these experts believe there are a number of reasons that the timeline of new vehicles will be drawn out. The biggest reason is simply the time it will take to fully repeal the tariff, as a set timeline has not been disclosed. Furthermore, the added cost of transporting the trucks might not be worth it for some automakers. U.S. safety and emissions regulations are also a factor, as the models designed overseas would need tweaks to comply with our standards.

Source: Automotive News (Subscription required)

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