Given that Venezuela sends oil to China, India, the United States, and Spain, analysts warn that the US president’s move could have a negative impact on those nations.
On Monday, US President Donald Trump announced that he will slap a 25% tariff on nations that purchase gas and oil from Venezuela. This punitive step might affect Asian markets, such as China and India, and create new trade uncertainties worldwide.
“The United States and the freedoms we support have been met with extreme hostility from Venezuela,” he wrote on his Truth Social network.
The United States will therefore be required to impose a 25% tariff on any trade with Venezuela by any nation that buys oil and/or gas from us.
Trump issued an order on Monday that allows the most recent universal 25% taxes on direct and indirect purchasers of Venezuelan oil to go into force as early as April 2.
Trump’s statement follows the suspension of the deportation pipeline between the US and Venezuela last month after he said Caracas had failed to fulfill an agreement to expedite the reception of deported migrants. Following that, Venezuela declared it would no longer accept the planes.
However, Caracas announced on Saturday that it has achieved a deal with Washington to resume repatriations, following the deportation of almost 200 Venezuelan nationals from the United States through Honduras.
What It Will Do to India
Given that Venezuela sends oil to China, India, the United States, and Spain, analysts warn that the US president’s move could have a negative impact on those nations.
India was the market leader for Venezuelan crude oil purchases in December 2023 and January 2024. New Delhi imported about 191,600 barrels a day in the first month, and by the next month, that number had risen to almost 254,000. Approximately half of Venezuela’s oil exports (approximately 557,000 barrels per day) were being imported by India in January 2024.
India imported 22 million barrels of oil from Venezuela in 2024, accounting for 1.5% of its total crude oil purchases.
According to a report by AFP, Venezuela shipped almost 500,000 barrels of oil per day to China in February, while the United States exported 240,000 barrels.
Drops in Oil Prices
Monday saw a 1% increase in oil prices after Trump’s decision. Brent oil futures increased by 84 cents, or 1.2%, to $73 a barrel, while US West Texas Intermediate oil increased by 83 cents, or 1.2%, to $69.11.
However, price increases were limited since the United States granted Chevron, an oil producer, until May 27 to stop its operations and exports from Venezuela. At first, Trump had given Chevron until March 4 to terminate that license.
Together, the two actions increase pressure on other buyers of Venezuelan oil while relieving some of the burden on Chevron, though it is unclear how the Trump administration will implement the tariff.
The Tariff Plans of Trump
In an effort to bolster both diplomatic and economic policy, Trump has imposed tariffs on both US friends and adversaries since taking office again in January. It is up to the secretary of state to decide whether to impose the charge after consulting with other US authorities.
The 25% duty will be added to current rates, Trump said reporters on Monday. In an attempt to address unfair practices that Washington finds objectionable, he has already pledged reciprocal tariffs customized for each trading partner, dubbed April 2 “Liberation Day” for the largest economy in the world.
He had earlier hinted that sector-specific levies would be implemented that same day, but the White House stated on Monday that a more focused strategy might be used.
