Corrupted USB (can't format)?

If it reports I/O errors, consider it broken. As in, physically.

Specifically, some sectors are no longer usable (maybe so many that the USB stick no longer has physical storage to remap them to, maybe it doesn't do remapping at all?).

Even though the FAT32 formatting process happens to not use those places for filesystem metadata, that's not an indication that FAT32 will work: it just means you'll get the errors later on, when writing actual data (i.e. copying files).

(While some filesystems have the feature to avoid known bad sectors, this only works e.g. for HDDs, where those bad sectors generally stay put and new ones appear rarely. On a cheap USB stick with flash memory, trying to use this feature will just slightly delay the inevitable.)