Trump's tariff formula confounds the world, punishes the poor

April 3 (Reuters) - Ridiculed for imposing trade tariffs on frozen islands largely inhabited by penguins, Donald Trump's formula for calculating those levies has a serious side: it is also hitting some of the world's poorest nations hardest.

The math is simple: take the U.S. goods trade deficit with a country, divide it by that country's exports to the U.S. and turn it into a percentage figure; then cut that figure in half to produce the U.S. "reciprocal" tariff, with a floor of 10%.

That's how the volcanic Australian territory of Heard Island and McDonald Islands in the Antarctic ended up with a 10% tariff. The penguins got off lightly, you might say.

But Madagascar - one of the poorest nations in the world with gross domestic product (GDP) per head of just over $500 - meanwhile faces a 47% tariff on the modest $733 million of exports of vanilla, metals and apparel that it did with the U.S. last year.

"Presumably no one is buying Teslas there," John Denton, head of the International Chamber of Commerce (ICC), told Reuters, an ironic reference to the improbability of Madagascar being able to placate Trump by buying upmarket U.S. products.

Madagascar is not alone: the bluntness of the formula as applied to economies which cannot afford to import much from the U.S. inevitably leads to a high reciprocal tally: 50% for Lesotho in Southern Africa, 49% for Cambodia in Southeast Asia.

"The biggest losers are Africa and Southeast Asia," said Denton, adding the move "risks further damaging the development prospects of countries alrea...
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