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NEWS

Trump's Tariff chaos, a disaster even for uninhabited Islands

Updated

The White House's tariff menu is also a geopolitical absurdity: tariffs on islands with no population, tariffs on others that neither produce nor export anything, or tariffs on EU territories different from those imposed on the continent

President Donald Trump.
President Donald Trump.AP

Exports made by over a million penguins of six different species in the Antarctic islands of Heard and McDonald now face a 10% tariff at the customs of United States.

The inclusion of these two Antarctic islands, which belong to Australia and have been uninhabited for 192 years since the last elephant seal hunting station was dismantled (giant seals that can weigh up to five tons), is the most tangible example of the tariff disaster of Donald Trump.

It's not just that uninhabited islands have been included in the list. It's also that these islands belong to other countries to which Washington is granting a different tariff regime. For example, the closest country to these islands is not Australia but Madagascar, which is also one of the poorest nations on Earth.

What would happen, for example, if a Malagasy company established a subsidiary, at least on paper, shadowing the Big Ben volcano, the largest in that country, surrounded by glaciers, on Heard Island? In theory, it should only pay a 10% tariff in the United States. If Madagascar - a country so poor that its per capita income is less than 500 euros, 98.5% less than Spain - wants to export something to the United States, it will encounter a 49% tariff, which will literally kill that sale.

Geographically, Madagascar is the closest country to these two islands. So perhaps the most practical thing for vanilla producers - Madagascar's main export - would be to establish a company among the glaciers surrounding the Big Ben volcano, the largest in Australia, located on Heard Island. It wouldn't be an unreasonable policy. After all, this is how U.S. tech companies, by establishing their operational bases in Ireland, funneled their profits from the EU directly to tax havens, barely paying any Corporate Tax.

The owner of one of the largest, Mark Zuckerberg, owner and founder of Meta, met with Trump just before he announced the tariffs. He didn't do it to provide ideas on how to evade them but, according to U.S. media, to ask the president to end the regulatory process against his company for monopolistic practices. In that regard, more than Dublin, the capital of Ireland and its tax schemes, Washington is increasingly resembling Antananarivo, the capital of Madagascar, a country that ranks very low in all corruption indices.

But the White House itself has created other ways for its own tariffs, if not failing, at least to make a mockery. The most obvious example is with the second trade bloc that Trump despises the most: the European Union.

Three French departments that are part of the European Union have much lower tariffs than the EU as a whole. While the tariffs for the latter are 29%, for Réunion in the Indian Ocean, and Martinique and Guadeloupe in the Caribbean, they are only 10%. This theoretically opens up the possibility of diverting exports to those countries and then redirecting them to the United States.

On the contrary, the French islands of Saint Pierre and Miquelon, located just across from Newfoundland, which belongs to Canada, have a population of only 6,000 and their exports to the United States - of the only things they produce, namely fish and seafood - are minimal, yet the White House has imposed a 50% tariff on them.

All these examples are just a few cases within the string of absurdities of the tariff menu presented by Donald Trump on Thursday. The Norwegian island of Jan Mayen, in the Arctic, is only inhabited by military and meteorologists, two types of professionals generally not linked to exports, but that hasn't exempted it from tariffs. At the opposite end of the world, Christmas Island has 2,000 inhabitants, although what really makes it famous is the annual migration of crabs through its territory. Nevertheless, Christmas's exports to the United States are zero. Still, it faces a 10% tariff. The same goes for Tokelau, whose 1,500 inhabitants engage in subsistence fishing, an activity that by definition excludes exports.

More curious is the case of Norfolk Island, which like Heard and McDonald, belongs to Australia. According to the U.S. news agency Associated Press, Norfolk not only does not export anything to the United States but also does not charge any tariffs on imports from anywhere. Washington must have found such commercial openness suspicious. Result: a 29% tariff.

These absurdities suggest that the entire methodology for establishing U.S. protectionist barriers has the same logic as "using the number of vowels in a person's name to decide how much tax they will pay," as explained by the British weekly The Economist on Thursday.

These examples also demonstrate the other side of tariffs: the business they will represent for consulting firms and law firms specialized in designations of origin and in helping to relocate companies. Botswana, despite being the most prosperous and stable country in Africa, will have a hard time getting its diamond production past U.S. customs barriers of 37%. Madagascar, as mentioned earlier, is in a much more complicated situation. But the South African group DeBeers, which controls a large part of the world's diamond production (and in Botswana), will most likely be able to find loopholes in the U.S. customs wall.

This leads to another issue raised on the same Thursday by Democratic Senator Chris Murphy in a video posted online: buying favors within the United States.

From now on, U.S. companies that want the tariffs affecting them to be lifted will have to request it directly from the Executive branch. That means going to Donald Trump. In his first term, the president granted exceptions to almost all imports of the consumer electronics giant Apple. The president and CEO of that company, Tim Cook, proved to be an extraordinary negotiator by setting aside his well-known sympathy for the Democratic Party and getting everything he wanted from Trump.

Now, this will happen on a national scale. And the Trump administration in 2025 has very clear ideological objectives. In two months, it has managed to make companies abandon their goals of diversity, equality, limiting greenhouse gas emissions that cause climate change, and preserving the environment in general.

In his annual letter to shareholders, Larry Fink, chairman and CEO of the world's largest asset manager, BlackRock, did not mention decarbonization once in 2025. From now on, that will be the norm. A norm in which, once again, small businesses and the poorest countries will not be able to participate.