The chicken tariff spat that killed Detroit

The NYT has an editorial online about the unintended consequences of government interference in the market. The editorial traces the roots of American auto makers' disproportionate share of the light truck market (a declining one in the face of $100+ barrels of oil) to a retaliatory trade war started in the 1960s. Germany, in an attempt to protect its own domestic poultry market, convinced the European Common Market (the second incarnation of what has become the EU) to triple the tariff on frozen chicken imported from the United States. The US retaliated, imposing a 25% tariff on light truck imports, a move directly targeted at Germany's Volkswagen automaker. However, the tariff was also imposed on Japanese imports, giving Detroit an advantage when it came to competing with the Japanese over the American auto market. The chicken tariffs ended long ago, but American carmakers got too cozy with the benefits from the light truck tariff, and now it's coming back to bite them in the ass with that market in free-fall and consumers going for smaller cars. A nice example of the unintended consequences of government action.