Trump's New Tariff Threats: Targeting Venezuelan Oil Purchasers

President Donald Trump has issued a warning of potential 25% tariffs on U.S. imports from countries that buy oil from Venezuela, branding it a “secondary tariff” intended to penalize the country for alleged actions, including sending gang members to the U.S. Meanwhile, Trump hinted at a possible easing of tariff plans for other nations, suggesting the administration might offer more leniency than previously disclosed.

Markets reacted positively to Trump’s remarks, with major U.S. stock indexes rebounding after weeks of losses attributed to tariff uncertainties. Notably, the S&P 500 rose by 1.7%, the Dow Jones Industrial Average by 1.2%, and the Nasdaq by 2.2%.

Tariffs act as a tax on imports paid by buyers, not the sellers, and since taking office, Trump has utilized tariffs as leverage in various disputes, often related to trade. He confirmed plans to impose tariffs on specific goods like cars and computer chips, asserting that these tariffs have already incentivized U.S. investment.

The new tariff threats could press nations including China, India, and Spain—current buyers of Venezuelan oil—to minimize their transactions, which support the Venezuelan government’s finances. Despite China importing over 11 million barrels of oil daily, it doesn’t heavily rely on Venezuelan oil, making the U.S., particularly through Chevron—which has received exemptions from sanctions—its main buyer.

The Trump administration has stated that time is running out for Chevron’s operations in Venezuela following an updated order that extends their deadline until May 27. After the announcement, oil prices saw an increase of over 1%.