President Donald Trump’s “Liberation Day” tariffs should take effect this week. The Heard Island and McDonald Islands, uninhabited territories of Australia, were among the countries and territories affected.
Critics quickly said that the tariffs on the islands would be ineffective, as the islands don’t export to the United States. They mocked the policy as “penguin tariffs” because the islands’ population primarily consists of penguins.
Commerce Secretary Howard Lutnick gave an interview on Face the Nation Sunday with Margaret Brennan to explain Trump’s use of sweeping tariffs.
Brennan attacked the tariffs on the Australian territories and asked if the Trump administration used artificial intelligence when building the tariff chart.
“Why are the Heard and McDonald Islands, which don’t export to the United States and are quite literally inhabited by penguins, why do they face a 10% tariff?” Brennan asked. “Did you use AI to generate this?”
Lutnick denied the use of AI and said the additional tariffs would close trade loopholes for other countries.
“If you leave [any territory] off the list, the countries that try to basically arbitrage America go through those countries to us,” Lutnick said. “The president put tariffs on China … in 2018, and [what] China started doing was they started going through other countries to America. They billed through other countries to America, and so the president knows that he is tired of it, and he is going to fix that.”
Without the additional tariffs, China could repeat its strategy from the first Trump administration and funnel exports through Heard Island and McDonald Islands, counting them as exports from those territories. Trump’s tariffs would have no real effect because there would be a way to bypass them.
In the wake of Trump’s tariff announcement, the Dow fell more than 3,000 points to close the week. Since opening Monday, it appears to have stabilized slightly. Trump has assured Americans that the economic pain will only be temporary.
“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump said to reporters Sunday. “What’s going to happen to the markets, I can’t tell you. But our country is much stronger.”
Trump also asked for patience on his tariff policy in a Truth Social post: “HANG TOUGH, it won’t be easy, but the end result will be historic.”
TRUMP SIGNALS SWEEPING TARIFFS HERE TO STAY AS FUTURES MARKET PLUNGES
While the U.S. has implemented tariffs before, it has never done so in such a broad, sweeping fashion. It will likely take time for the markets to adjust to the full effects of the policy.
While imported products may become more expensive in the short run, if Trump’s plan proves successful, he will accomplish his goal of bringing manufacturing jobs back to the U.S.