How chickens built the American pickup

It's the 100th anniversary of Route 66, a roadway that has both shaped and reflected the twists and turns of the U.S. economy and its development. So what does a journey along Route 66 teach us about where the American economy might be headed next, amid the advent of artificial intelligence? “Marketplace Morning Report” David Brancaccio set out from Southern California to find out.

I’m just back from 900 miles on historic Route 66, which turns 100 this year.

I was with two pals, Jamie Kitman, a veteran automotive writer, and John Krafcik, a veteran automotive CEO and former head of Waymo. And at this time of reverse globalization, those two car guys kept referring to something called the chicken tax. John is on the board at Rivian now, so you can guess the brand of electric car we were sitting in when I got John to tell this story of trans-Atlantic protectionism.

John Krafcik: So, this is something that started, believe it or not, back in the early ‘60s. U.S. poultry producers were revolutionizing the global chicken industry, and they had figured out a way to mass-produce chickens. And it turns out Germany had a need for more chickens, and they were interested in importing more of these chickens. However, the German poultry farmers were a little bit upset. They convinced the German government to put a tariff on those chickens.

Brancaccio: The U.S. had a response to the tariff that the Europeans put on our chickens. What was it?

Krafcik: Well, that's right, they put a 25% tariff on all light-duty commercial vehicles or trucks — things that we know today as pickup trucks or commercial vans. But the interesting thing is, they applied that tariff not just to the Common Market countries in Europe, but globally. And lo and behold, David, 60 years later, the chicken tax is still in effect, and I think it is one of the most important, formative aspects of how the U.S. industry has evolved during those six decades.

Brancaccio: You think, as a person with long experience in the automotive industry, that the effects of that tariff can still be seen in the market today?

Krafcik: Isn't it crazy? Yeah, for example, that time, if you go back to the pre-chicken-tax world, Volkswagen was having a lot of success in the U.S. market, and it caused Detroit to innovate back.

Brancaccio: So, all this innovation, then the response to the chicken tax, the light-duty truck tariff.

Krafcik: Absolutely, and then Detroit took a different approach, because Volkswagen decided, “Hmm, it's hard for us now to send our Kombi vans across the Atlantic to the U.S. market, because that 25% tariff raises the price so much.” So American car and truck buyers, we lost all of that opportunity to consume low-priced imported trucks. And we got stuck with full-size pickup trucks and full-size commercial vans, and that's been pretty much it for the last 60 or so years.

Chevrolet advertisement: Spectacular is the word that best describes the power behind all ‘62 Chevy trucks.

Brancaccio: You look at that pickup truck from 1962, and it looks pretty much like a pickup truck you're going to buy today, maybe a little less aerodynamic. But you think that this tariff may have kind of preserved the status quo when you compare the truck from 60 years ago and the truck now?

Krafcik: Yeah, I mean the architecture of a 2026 full-size Detroit pickup truck? Pretty much the same as what we had back in the ‘60s.

Brancaccio: Now, U.S. automakers make a lot of money off of those light-duty trucks, the pickup trucks. That tariff, you think, has something to do with that?

Krafcik: I think it’s astonishing that the average transaction price in the U.S. for a full-size pickup truck today is over $66,000. I think this is why the big three are very, very comfortable with this particular tariff. It's the profit engine for the entire U.S. auto industry. But I think when you look at this tariff from a net social loss or a benefit standpoint, there's a big question mark over this. There's no question that small American businesses are paying a big tax on their fleet costs, their truck fleet costs, to support the U.S. automakers who are really enjoying wonderful profits due to these tariffs.