The defending theory for that is that it doesn't allow for loopholes by trading through tax exempt countries.

It's certainly an interesting strategy. Let's see how it plays out.

Except those islands are Australian territories. And they've given Australia higher tariffs, so in theory they could reduce these tariffs (which will be paid at least in part by US citizens) by exporting through there?

There's nothing strategic about a 4 column excel spreadsheet and one formula.

By all accounts, it doesn't make sense. Hence why it's ... well, interesting, to say the least.