President Donald Trump has announced a new tariff strategy targeting buyers of Venezuelan oil, marking a significant escalation in economic measures against Venezuela.… I would call the proposed 25% tariff on U.S. imports from any country that continues buying Venezuelan oil a “secondary tariff.” Most notably, he seeks to punish Venezuela for a whole host of reasons, including the alleged deliberate dispatching of gang members to the United States.
The intent of the proposed tariff would be to add pressure to existing buyers of Venezuelan oil to stop or reduce their imports from Venezuela. This decision is part of the larger U.S. effort to increase economic pressure against Venezuela. Yet that’s exactly the threat Trump has made to impose with this tariff. He dropped a big hint that the final administration would go easier, implying they’d be “nicer than that” with the final rates on the tariffs.
Chevron chose not to respond to these events, in keeping with their practice as a major oil corporation. As the world’s most important consumer of Venezuelan oil, recently, it is the U.S. that’s profiting from Chevron exemptions. The Trump administration last week extended the deadline for Chevron to cease its operations in Venezuela to May 27.
When the potential tariffs were first announced a week ago, the markets wasted no time weighing the consequences. What they learned made for an encouraging end to the day. It was Trump’s comments that triggered this market reaction. On a more immediate state level issue, Gov. He suggested that he might be willing to shift his view on tariffs for imports from other countries and indeed that he “might exempt a whole bunch of countries.”
"For numerous reasons," including allegedly "purposefully" sending gang members to the US.
— President Donald Trump
Despite Venezuela's limited role as a crude oil supplier to China, with China importing over 11 million barrels per day last year, the proposed U.S. tariffs could alter global oil trade dynamics. This news lands just as Trump has already increased tariffs on Chinese imports to over 20% since February.
President Trump has taken a very personal interest in tariffs on certain products, such as cars, lumber and computer chips. So far, he thinks those measures are increasing domestic investment in the U.S. economy. Responding to the recent announcement, oil prices jumped over 1%, a sign of how the market is reacting to high-impact geopolitical news.