The White House has defended Donald Trump’s decision to slap tariffs on one of the most remote corners of the planet – a windswept Australian territory populated by penguins, seals, and not a single human being. The move, which stunned Canberra and perplexed economists including Julian Jessop, Research Fellow at the Institute of Economic Affairs, targets Heard and McDonald Islands, an isolated speck of land 2,500 miles from the Australian mainland devoid of infrastructure or residents.
However, according to US Commerce Secretary Howard Lutnick, the tariffs are no mistake. In an interview with CBS, he insisted the listing was part of a broader crackdown on backdoor shipping routes: “If you leave anything off the list, the countries that try to basically arbitrage America go through those countries to us. The President knows that, he’s tired of it, and he’s going to fix that.”
The statement follows a warning from Australian Trade Minister Don Farrell, who described the decision as “clearly a mistake” and said it pointed to a “rushed process” behind the latest round of trade penalties.
The islands are uninhabited, but official figures show they have been used as a nominal shipping origin in recent years.
According to World Bank data, in 2022, more than $1.4 million worth of goods—mainly categorised as “machinery and electrical”—were exported from the territory to the United States. However, it’s not clear who shipped them or how.
Mr Jessop shared a photoshopped image of Mr Trump appearing to argue with a penguin in the Oval Office, quipping: “No sign of breakthrough in crucial trade talks…”
Trade experts have long claimed so-called transshipment – the practice of routing goods through obscure or lightly regulated regions – is a grey area open to abuse.
Pew Charitable Trusts estimates that hundreds of millions of dollars’ worth of illegally caught tuna and similar fish are moved this way in the Pacific alone each year.
It also enables exporters to obscure the true origin of goods, helping them dodge duties or sanctions.
Another surprising inclusion on Mr Trump’s tariff list is the British Indian Ocean Territory. Like Heard and McDonald, it has no civilian population and is mainly used for military purposes.
World Bank figures show it exported $414,350 to the US in 2022.
The backlash comes after a brutal week on Wall Street, where the Dow Jones, Nasdaq, and S&P 500 all tumbled by more than 5% – their worst collective showing since 2020.
The new tariffs, targetting a wide range of countries and jurisdictions, were cited as a key driver of the sell-off.
Still, Mr Lutnick remained defiant. “We’re going to close the ridiculous loopholes. That’s what this is about,” he said.