Tariffs For Penguins

Trump’s tariffs are the product of a person who doesn’t understand the levers they are pulling, but the UK responding as if we achieved a victory is a flat out lie.

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Donald Trump cannot conceive of a “positive sum game”, that is a deal where both parties end up coming away better off than they were before the deal was made. Collaborative community action is a positive sum game when the whole of the community is greater than the sum of its parts (watch once of those “Alone”-style survival programmes to get a glimpse into what true “individualism” actually means).

Trump believes that the only deal possible is a zero-sum game. If there is a “winner”, then there must be an equal and opposite “loser”.

Trump is also deeply narcissistic and believes that if he can perceive you “winning”, then HE must be the “loser” and that cannot be allowed to stand. In his “Art of the Deal”, a “fair” deal is one that he wins.

Now that the world is “fair” again, any attempt by any nation to apply a retaliatory tariff or other sanction will be met with fire, fury and injustice.

Don’t worry if you disagree with his logic or his assumptions here. The key to understanding the trade tariff announcements this week is not whether or not you think he’s right but whether or not HE thinks he is.

Sir Keir Starmer thinks he has won a diplomatic coup. That the “Special Relationship” has saved the UK from the wrath of Trump’s tariffs – at least compared to the EU. The UK got hit with a 10% tariff, the EU got 20%. This, if you watch the UK Government aligned media or commentators, is a sign that all of the begging and grovelling for concessions and special privileges helped take the edge off of a bad situation. Keir Starmer believes that his strategy is a vindication and that we must all “trust the process”.

Sir Keir Starmer is wrong. His actions played absolutely no role in how the tariff was applied to the UK. He could have begged harder and utterly prostrated himself in front of the golden throne. Or he could have stood straight and pushed back. It wouldn’t have mattered. Sir Keir Starmer is an irrelevance to Trump.

With a few exceptions like Trump’s hatred of foreign cars and the fact that these latest tariffs appear to be additional to the tariffs put on countries like China and Canada previously, the calculation of the rate for each country was disturbingly simplistic. For countries where the US has a trade surplus in goods (but not services – this will be important. Trump doesn’t believe that exports like Holywood movies, Microsoft Office subscriptions or licensing deals to produce goods outwith the USA under the Coca-Cola or McDonalds name are worth anything to the US), the rate is 10%. For countries where the goods trade balance is a deficit (i.e. a higher value of goods from country X enter the US that American goods leave for country X), then they took the value of the trade deficit (import value minus export value) and divided it by the value of imports. If a country sells $100 of goods to the US but only buys $60 worth back, then $100-$60 / $100 = 0.4, so they get an 40% tariff. Except Trump then halved the values above the 10% floor because he’s “being nice” (which, of course, undermines his stated purpose of the tariffs being the minimum amount required to restore a trade balance - once again, it doesn’t matter if you see why he’s wrong, only that he doesn’t).

This is why countries like Madagascar and some of the world’s poorest countries are high on the list. The largest single item that Madagascar exports to the USA is vanilla – one of the most valuable spices in the world at around $83 million per year. Goods experts from the USA to Madagascar are comparatively sparse. There isn’t much that the US can send that they can’t get from somewhere closer and, more crucially, high value goods are of limited value to a populace who can’t afford them. Madagascar isn’t “ripping the USA off”. They’re just selling spices that the USA is about to realise they used to really enjoy.

Other anomalies abound like the mention of sub-national states like the Falkland Islands and France’s “we don’t call them colonies any more” territory of St Pierre and Miquelon that sits off of Newfoundland in Canada. There are two main theories why these substates are included. One being that some Musk-ish techbro made the list by asking Grok or another chatbot for a “list of countries” and it returned a list of countries that have a country code top level internet domain like .uk or .eu (though if they did, I’m surprised that they had the awareness to remove .su so they didn’t try to apply a tariff on the Soviet Union despite America being somehow completely unable to export ANYTHING to them for going on 35 years now). The other is that they just copy/pasted the CIA Factbook list of notable polities which includes several sub-state territories of various kinds. (Fun Fact: I had to do this precise kind of filtering while writing our Profit Extraction paper because the World Bank’s database I used also includes various substates, suprastate regions like “West Africa” and multiple nations that no longer exist but did exist when the Bank started tracking their data).

The omissions are interesting too. Russia and Belarus were omitted “because we already have sanctions on them” but Iran – which is also under US sanctions – was not. There’s a very telling thing going on when you look at the nations that Trump is willing to break the sharpie out and deviate from the formula for.

There are two most “fun” additions to the tariff list. The British Indian Ocean Territory which is essentially exclusively inhabited by a US military base (the people who used to live there before the UK and USA ethnically cleansed them call them the Chagos Islands). The other, being widely reported, is the Australian external territory of the Heard and McDonald Islands. They got a 10% tariff as well (remember, 10% is the floor rate for countries where the US is already “winning” on trade). Major exports from these islands are...nothing. There is no trade. There are no people there. It’s mostly just penguins. Penguins aren’t widely known for their genius at negotiating international trade deals, but still somehow they managed to achieve the same level of success against Trump as Sir Keir Starmer.

And this is the core point. The Trump Trade War of 2025 has no logic to it (see Robin’s briefing this week on how nations SHOULD be applying tariffs as a means of correcting for pollution and other “externalities” that capitalism fails to pay for), it’s going to spiral worse for the countries that fight back, worse still for American consumers, and only marginally better for the countries that lick the boot to try to pick off country-specific, sector-specific or even just personal exemptions – at the cost of their own surrendering their own sovereignty to the Great Orange One.

But don’t be fooled by any of Starmer’s claims that he has steered the UK through the choppy waters better than, say, the EU. The numbers are there and plain to see. The UK got 10% not because of “winning”, or “losing”, or diplomatic ability, but because the UK simply doesn’t matter to Trump.

But still. “Trust the process”, Starmer asked us to believe, while failing to negotiate any better than a penguin.