Vanguard Magazine

I recently wrote an article in the Toronto SUN newspaper titled, "How America won the chicken war and why Trump will try it again". The crux of the article was about a tax that the Germans imposed on American chicken aer the Second World War. I recounted that at the time, prosper- ity was working its magic, allowing Euro- peans to live cheaper and increase their standards of living, which was helping to rebuild their shattered economies. Do you know where your suppliers are? 36 AprIL/MAY 2017 www.vanguardcanada.com Trump's Trade war will force country-of-origin tracking in supply chains T TechnoloGy WAtCH by nicole verkindt The chicken Tax Germans, in particular, were enjoying their cheap American frozen chicken day in and day out, much to the annoyance of the small, struggling German chicken farmers. As a result, in a purely political reaction, West Germany imposed punishing du- ties on chicken imports. Meanwhile, Americans had become hooked on the lovable Volkswagen beetle, as well as the iconic VW "hippy van," which had exploded in sales. Pickup trucks were very clearly Volkswa- gen's next market opportunity. American auto manufacturers, however, much like their German chicken farming counterparts, weren't keen on competing with cheap imports. Needing the auto manufacturers' union support, President Johnson made a deal with the United Auto Workers in 1964 and responded with his retaliatory 25 per cent tariff against the Volkswagen imports. It was referred to as the "Chicken Tax," which still exists to this day, and applies to all countries outside NAFTA. In politics, it's almost always "tit for tat" when protectionism starts. Not all wars have a clear winner, but it would seem today that Americans dominate in pickup trucks much more so than Germans do in chickens. The Chicken Tax essentially legislated American success in the light truck market, and now President Trump is hoping to recreate this same sort of success in other markets. Trump's chicken War The United States is the largest consumer market in the world. To a businessman like Trump, who prides himself on his ability to "negotiate," the obvious solution is to tilt the playing field in his direction, and simply legislate the jobs. For example, Trans- Canada Pipelines had proposed that 50 per cent of the Keystone pipeline would be built using U.S. steel, however, President Trump's executive order demanded 90 per cent to be made in the U.S. Although he seems to have relented on the steel specifically, given that it was mostly already stockpiled, Trump has started his "chicken war". But what does this mean for the defence sec- tor, especially given that it is typically exempt from WTO or NAFTA agreements? And how will other sectors be impacted? The Jones Act To some extent, there are already a number of areas and indus- tries in the U.S. where this reporting is already required – par- ticularly in the transportation and defence sectors. For example,

• Cover