Why pickups cost so much in the U.S.

It’s OK to talk politics with your family. I know this because my two brothers and I like to talk about pickup trucks, which is really just another way of talking politics.

I should explain. The brothers are both engineers. But not the kind of engineers who sit in front of a computer writing code and collecting stock options. They’re the kind of engineers who go to remote work sites full of heavy equipment and hazardous chemicals. They know about pickup trucks.

By Michael L. Davis

It’s OK to talk politics with your family. I know this because my two brothers and I like to talk about pickup trucks, which is really just another way of talking politics.

I should explain. The brothers are both engineers. But not the kind of engineers who sit in front of a computer writing code and collecting stock options. They’re the kind of engineers who go to remote work sites full of heavy equipment and hazardous chemicals. They know about pickup trucks.

I’m an economist who works in a nice air-conditioned office. I drive a Subaru. In a sensible world, I wouldn’t have much to add to the truck-talk.

And for the last few days, the truck-talk has taken on a new urgency. That’s because Little Brother needs a new truck and Big Brother has strong, well-informed opinions. His opinions are not controversial; the guy knows his trucks. But neither are they especially helpful. That’s because the particular model of mid-sized pickup that best suits Little Brother’s needs — a Toyota Hilux, which is wildly popular all over the world — cannot be purchased in the U.S.

The brothers are not happy about this. I’m not either, but at least I can explain the reason why. The story about the missing Mexican pickup is really a story about chickens and the 1964 (yes,1964!) U.S. presidential election.

It turns out that in the early 1960s, American farmers had gotten really good at raising chickens cheaply. European farmers were still really bad at raising chickens, which meant they couldn’t compete against American imports. Now of course, the European farmers might have stepped up their chicken game — a couple of semesters at Texas A&M could have taught them how. But it was easier to get their governments to impose big taxes on American birds imported into France and Germany.

Tariffs beget retaliatory tariffs — a fact often ignored in the giddy rush to start a trade war — and so President Lyndon Johnson decided to impose tariffs on a bunch of European-made food ingredients. He also imposed a 25% tariff on… foreign-made trucks.

That’s where the politics comes in. The Germans may have been bad at chickens, but they were getting really good at making pickups. That worried Walter Reuther, head of the United Autoworkers. He didn’t want American union members competing against German union members. That competition would have been great for Americans who buy trucks but bad for American autoworkers making trucks. Instead, he wanted the U.S. to impose big tariffs.

President Johnson also wanted something: to be reelected in 1964. He did not want autoworkers going on strike in the middle of his campaign. Say what you will about Reuther and Johnson, but they usually got what they wanted. They did in 1964. We now know from LBJ’s “secret” recordings that he and Reuther made a deal: no strike in exchange for tariffs.

But why, my siblings ask, does a backroom deal made 60 years ago mean that Little Brother will spend an extra $10K on a truck that’s not as good as the model he wants?

Well for one thing, we should take advantage of the bizarre, bipartisan, bone-headed stupidity that is our current presidential campaign. Tariffs are taxes mostly paid by the people buying the stuff being taxed. Tariffs reduce jobs. (If you don’t believe me, think about, say, a little family-owned plumbing business that might hire another crew if only they could afford a new truck.)

Sensible politicians don’t generally run on a platform of higher taxes and fewer jobs. That’s why LBJ and Reuther made their deal in secret.

But that’s exactly the promise both of our current candidates are making a cornerstone of their campaigns. They’re proud to be raising taxes on ordinary consumers and costing blue collar workers jobs. So why not call them on it?

Former President Donald Trump says he’s going to impose 10% tariffs on everything Amercans import. Ask him to explain how raising taxes on American consumers will make America great. (And if he tells you that consumers don’t pay those taxes, ask him to find any serious economist who agrees.)

President Joe Biden refused to roll back any of the tariffs Trump imposed on Chinese goods, and he has his own list of new ones. Ask him the same question. (And if he says his tariffs are necessary to deal with the national security threat posed by China, don’t argue. Just ask him why taxing American consumers and putting workers out of jobs is a better way to deal with China than beefing up the military and strengthening alliances.)

I say we become single-interest voters! I say we refuse to support anyone who won’t promise to MAKE AMERICAN PICKUPS AFFORDABLE! It might not work, but think how great that acronym will look on a red hat.