The Venezuela Oil Tariff Tests Trump Policies

Forbes

01-04-2025

BEIJING, CHINA - JANUARY 7: Venezuela's President Nicolas Maduro (R) walks with Chinese President ... More Xi Jinping (L). China is a significant consumer of Venezuelan oil, and the trade between the two countries represents one aspect of a broader strategic relationship. (Photo by Andy Wong-Pool/Getty Imgaes)
Today, disparate Trump policies —more muscular American diplomacy, less soft power, higher tariffs, and the quest for cheap energy — are being tested together in Venezuela. The pro-Russia, pro-China, and pro-Iran far left Maduro regime in Caracas has long been a thorn in the side of the United States in the often-neglected Latin American theater.
The first Trump Administration focused heavily on applying pressure to the country to minimize its benefits from oil exports in the U.S. American economy. Now, early in President Trump's second term, he is reviving efforts to weaken the Chavista dictatorship by imposing secondary tariffs of 25% on all imports from countries that buy Venezuelan oil, starting on April 2nd. Additionally, on March 29th, the U.S. informed foreign partners of Venezuela's state-owned oil company, Petroleos de Venezuela (PVDSA), that it plans to revoke authorizations issued by the Biden Administration for them to export Venezuelan oil and byproducts, putting further pressure on Venezuela's ability to export.
While such measures will have certainly gotten Venezuelan President Nicolás Maduro's attention, targeting that country's most profitable industry may be insufficient to implement the president's agenda.
Though Trump's March 24th announcement of these tariffs follows on earlier proclamations about Venezuela sending criminals and gang members to the U.S., his Truth Social post concerning the measure cites that country's opposition to the U.S. and the freedoms Caracas violates as motivation. Given the isolationist impulses that underpin many of the president's foreign policy actions since taking office, American adversaries are getting mixed messages.
The most stark example lies in the approach the administration has taken toward Ukraine, prioritizing putting a stop to conflict rather than ensuring that Russia's belligerent actions during the invasion are punished and anti-democratic messaging across Europe is countered.
CARACAS, VENEZUELA - FEBRUARY 02: Demonstrators protest against the government of Nicolás Maduro on ... More the Main avenue of Las Mercedes, municipality of Baruta, on February 2, 2019 in Caracas, Venezuela. The Maduro regime's anti-democratic actions are a primary driver of historical U.S. action against the country. (Photo by)
Several U.S. programs promoting the values of democracy and freedom, such as Radio Liberty, Radio Free Asia, Radio Marti, and others, have had their funding halted (Radio Liberty's funding was restored). These cuts will impact America's ability to advance democratic efforts worldwide and weaken authoritarian regimes like Maduro's.
China, as Venezuela's largest oil buyer, is poised to be impacted directly by these latest tariffs. The penalties would be applied in addition to tariffs already levied against China, putting it in a difficult position as it weighs whether to divest from Venezuelan oil, which makes up less than one percent of imports but represents a key part of the Chinese-Venezuelan relationship.
However, longer-term strategic considerations may outweigh the immediate economic pressure on China for suspending its oil trade with Venezuela. As other countries stop buying from Caracas, the country's dependence on China as a customer may increase, providing Beijing with more leverage over pricing and Venezuelan policy.
A closer trade relationship with Venezuela would solidify China's position as an indispensable partner, further enhancing its already growing soft power and presence in the region. As figures in the Trump administration like Secretary of State Marco Rubio decry China's growing influence in Latin America, the tariffs going into effect in April may have the unintended consequence of strengthening Beijing's position.
These tariffs could also hinder the efforts of the Trump Administration as it pursues similar measures against other exporters, particularly Canada. At the outset of his second term, Trump quickly got to work levying tariffs against the U.S.'s northern neighbor, with a current rate of 25% on all Canadian goods, except for oil and gas exports, which are taxed at a reduced rate of 10%. Even the reduced tariff on these resources causes alarm in Canada, as the U.S. is the country's largest market.
View of an oil rig over the south of the Maracaibo lake, off the coast of Maracaibo, Venezuela. Even ... More if Trump's tariffs are successful in driving customers away from Venezuelan oil, alternatives in Canada and Russia may be the answer to the resulting demand. (Photo by Federico PARRA / AFP) (Photo by FEDERICO PARRA/AFP via Getty Images)
American tariffs on countries trading with Venezuela are likely to prompt current consumers of Venezuelan oil to seek alternative suppliers. Analysts have already predicted that China and India could look to Russia as an alternative supplier, hardly a win for America. Canada could fulfill a similar role of an alternative exporter, as tariffs on Canadian energy, including its heavy oil, which is similar to Venezuela's, are already in force, and the United States has already proven discriminatory in energy trade with Ottawa before and after the first Trump Administration, as demonstrated by the persistent delays and eventual cancellation of the Keystone XL pipeline by the Obama and the Biden Administrations.
The Trump administration's attitude toward Venezuela has remained consistent across the President's two terms. However, by ratcheting up the pressure on Caracas by choking off its oil sales, the Trump White House risks strengthening China's strategic foothold in Latin America and Canada's economic position. Punishing Caracas makes sense, but so does the traditional U.S. promotion of democracy, human rights, and freedom of speech, commodities the Maduro regime sorely lacks.