The Big Three-s Shameful Secret Cato Institute — Volkswagen PickUp

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Volkswagen PickUp

The Big Three’s Shameful Secret

6, 2003

Last year, best selling car was … a truck. In for the last 21 years, the Ford has been the number one selling in America. Chevy Silverado, pickup, took the number two in 2002.

Americans love trucks. They are rugged and like the American pioneer. serve our inclination toward Pickups embody the American

But the “Big Three” harbor a secret. The industry is not as tough as the a rock” image it projects. the façade, the industry fears competition. And it forces its loyal to flip the bill for that

Foreign-made pickup trucks are to a 25 percent import tariff, a heartily endorsed by U.S. So a foreign truck valued at costs the importer $25,000 he can even clear customs. domestic producers of $20,000 have an artificial $5,000 enabling them to increase without appearing out of line.

At 25 percent, the import tariff is prohibitive. In 2001, fewer 7,000 pickups were from outside North That’s only 0.23 of almost 3 million purchased. imports, supply is smaller, are fewer, and domestic producers are the game in town. It’s a sellers’ market, sanctioned official U.S. policy. And buyers — if you’ll pardon the pun — the load.

The tariff is a vestige of a old dispute between the United and Europe. In 1962, the European Community raised import on chicken, which U.S. were selling with success in Europe.

After diplomacy failed, Johnson authorized retaliatory against four products to European exporters. Among was “automobile trucks,” a key export of Germany’s Volkswagen.

Intended to Europe to abandon its protectionist policy, the truck tariff was an failure. U.S. exporters lost the European chicken and Volkswagen cargo vans and trucks practically disappeared the U.S. market.

Japanese who were beginning to export to the United States at that were also hurt by the To remain viable, they exporting chassis (the truck minus the bed), were subject to a more 4 percent tariff. After a bed was attached to the chassis and the unit was as a pickup truck. The once-ubiquitous Luv was constructed from Japanese and sold according to this

In 1980, at the behest of the Big Three and the Autoworkers, the U.S. Customs reclassified cab chassis as trucks, them to the 25 percent duty and the loophole through which light trucks were available to U.S. consumers.

Volkswagen PickUp

protectionism encouraged Japanese in U.S. vehicle production. came Honda in 1982. after came Nissan, Mazda, Subaru, Isuzu, and and even the Germany-based BMW and Mercedes-Benz. 32 different foreign nameplate are produced in the United States.

mergers and equity tie-ups made it difficult to ascertain automakers are domestic and which are Chrysler has become DaimlerChrysler. Motors owns 49 percent of 20 percent of Fuji Heavy of Subaru), and 20 percent of Suzuki. owns 33.4 percent of DaimlerChrysler owns 37.3 of Mitsubishi; and Renault owns percent of Nissan.

Even with the world’s non-American truck producers, and Nissan, producing in the United the Big Three dominate the market. accounted for 87 percent of pickup sales in 2001.

So what U.S. producers’ affinity for a they don’t need? The plausible explanation is that it is to be an arrow in the quiver of U.S. negotiators. Under the mercantilist of trade negotiations, countries the “concession” of reducing their barriers in exchange for “concessions” Accordingly, the United States hold on to the high truck because it gives negotiators with which to bargain.

But removing the tariff is of limited value because the major truck producers already in the United States. It is unlikely to much in the way of reciprocal market

More importantly, the truck weakens the U.S. bargaining by undermining the credibility of U.S. policy. Maintaining a tariff of 25 — almost 10 times the average tariff — at the behest of a powerful interest reeks of hypocrisy.

policymakers have advocated trade and have urged our to remain steadfast in the face of own domestic protectionist pressures. The is jarringly inconsistent with rhetoric and is unfair to America’s truck buyers.


Volkswagen PickUp
Volkswagen PickUp
Volkswagen PickUp
Volkswagen PickUp
Volkswagen PickUp

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