President Trump said Monday that he would crack down on the country that purchased Venezuela's oil by imposing tariffs on goods sent to the United States, claiming that Venezuela had sent “intentionally and deceived” criminals and murderers to the United States.
In a post about the True Society, the president said countries that purchased oil or gas from Venezuela will be forced to pay 25% tariffs on exports sent to the US from April 2.
This unconventional use of tariffs could further disrupt the global oil trade as Venezuelan oil and gas buyers are seeking alternatives. According to research and consulting firm Rystad Energy, the US and China have been the top buyers of Venezuela oil in recent months. India and Spain also buy small amounts of crude oil from South American countries.
But in China, Venezuelan oil is a huge part of the country's imports, which is likely due to the threat of higher tariffs, which will cause China to look for oil elsewhere, said Jorge Leon, an energy analyst at Rystad.
The US purchase of Venezuela's oil will likely be rolled after the Trump administration said it would revoke a license allowing Chevrons to produce oil there.
But as Trump threatened more steep tariffs in other countries, his administration on Monday gave Chevron, the second-largest US oil company, two more months to produce oil in Venezuela and sell it to the US. The administration had previously ordered Chevron to abolish the operation by April 3rd.
The US and Venezuelan governments are sparring Trump's plans to deport US immigrants. Venezuela announced on Saturday that it had reached an agreement with the Trump administration to resume illegally accepting deportation flights for immigrants who were in the US.
“Venezuela was extremely hostile to the United States and the freedoms we support,” the president wrote. “Therefore, countries that buy oil and gas from Venezuela will be forced to pay the US a 25% tariff on trade with our country.”
Trump plans to impose new tariffs around the world when he introduces what he calls “mutual tariffs” on April 2nd. He said that while raising tariffs the US charges other countries for taxation, it will take into account other actions that affect trade, such as taxes and currency manipulation. The President calls it this “day of liberation.”
Trump has called for a new taxation threatened “secondary tariffs” on Venezuelan oil buyers. They are an unusual use of tariffs and it is not entirely clear how they work. Some trade and sanctions experts have said existing secondary sanctions related to countries such as Russia and Iran are already not fully enforced, questioning whether the US has the capacity to withdraw new tariff-based penalties.
“Given the limited enforcement of existing secondary sanctions, which have precedents, we don't know how realistic this strategy will be to develop effectively,” said Daniel Tannebaum, partner of Oliver Wyman, who advises multinationals on sanctions.
However, this strategy could help the US avoid putting financial sanctions on foreign banks that could threaten economic stability. Using tariffs could lead to the United States being seen as harsh as it does not take these risks.
A typical secondary sanction prevents an individual or business from purchasing oil or other products under sanctions from a blacklisted country. Otherwise, businesses could face fines or be cut off from the US financial system and face US sanctions.
But Trump and his advisors say they believe such sanctions could threaten the excellence of the dollar by encouraging other countries to find alternative currencies. They instead talked about the use of tariffs.
Treasury Secretary Scott Bescent said at a confirmation hearing in January that tariffs could provide an alternative to traditional financial sanctions, in addition to raising revenues and rerouting the supply chain.
“We probably got over the skiing a bit about sanctions and think that sanctions could drive the country from using the US dollar,” Becent said, “the tariff could be used instead.
