President Donald J. Trump has authorized the imposition of a twenty-five percent tariff “on all goods imported into the United States from any country that imports Venezuelan oil, whether directly from Venezuela or indirectly through third parties.”Footnote 1 The president’s order layers the possibility of “secondary tariffs”—a novel technique so called because the tariffs would be imposed not on Venezuela but on a country that trades with Venezuela—on top of the sanctions that he levied on that country’s oil sector, including the state-owned oil and natural gas company, Petróleos de Venezuela, S.A. (PdVSA), six years earlier.Footnote 2 The secondary tariff threat, though couched generally, principally targets China, which is the largest importer of Venezuelan oil.Footnote 3 Together with the administration’s concurrent revocation of licenses that had permitted U.S. and foreign energy companies to produce and purchase Venezuelan oil despite sanctions, the risk of secondary tariffs aims to cut off, more effectively and more comprehensively than before, the government of Nicolás Maduro’s most important source of income and foreign currency: the sale of oil.Footnote 4
President Trump imposed sanctions on the Venezuelan oil sector in early 2019 following the 2018 Venezuelan elections that the United States deemed illegitimate.Footnote 5 PdVSA’s property and property interests in the United States were blocked; U.S. persons were prohibited from entering into transactions with PdVSA; and anyone, including non-U.S. persons, who “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” PdVSA could themselves be designated for sanctions.Footnote 6 U.S. sanctions sought to cut Venezuela off from international energy markets, and they had the effect of curtailing production and restricting oil sales between Venezuela and many of its major markets, including the United States, Europe, and India. But the sanctions could not curtail PdVSA’s deals with Chinese, Iranian, and Russian entities, and they could not prevent the creation of a black market for Venezuelan oil that supplied China with hundreds of thousands of barrels per day at discounted prices.Footnote 7
President Joseph R. Biden, Jr. maintained the sanctions upon taking office, but he eased them in November 2022 to encourage Venezuela to move toward free elections.Footnote 8 This initial relaxation of sanctions took the form of a license—General License 41—issued to Chevron, a major U.S. oil and gas company and the last one with significant investments in Venezuela (through joint ventures with PdVSA).Footnote 9 The license permitted Chevron to produce petroleum and petroleum products in Venezuela for sale to the United States.Footnote 10 Following the October 2023 announcement of an agreement between Maduro’s government and the Venezuelan opposition, which promised, and established the conditions for, a presidential election in 2024, the United States eased sanctions further, issuing a six-month license—General License 44—that permitted the previously prohibited transactions with PdVSA, thus opening up the Venezuelan oil sector beyond Chevron.Footnote 11
The relaxation of sanctions would be temporary, however. In early 2024, as it became clear that Maduro would not follow through on his promise, General License 44 was allowed to expire, though Chevron’s General License 41, which by its terms renewed automatically, was permitted to continue.Footnote 12 Specific licenses, however, were granted to some European, Indian, and U.S. energy companies, allowing them to maintain their Venezuelan operations.Footnote 13 As of early 2025, Venezuela produced about 900,000 barrels a day.Footnote 14 About 480,000 barrels per day were exported to China, 250,000 to the United States, 63,000 to India, and 44,000 to Europe.Footnote 15 Chevron’s Venezuelan operations alone contributed about 31 percent of the government’s oil income.Footnote 16 The combination of general and specific licenses allowed for the continued flow of Venezuelan oil to the United States and particular partner countries but restricted (or attempted to restrict) its export to others.
President Trump reversed course as he began his second term, opting to reimpose “maximum pressure” on Venezuela.Footnote 17 By the end of March 2025, the new administration had taken two actions to cut Venezuela’s oil production and sales. First, the Treasury Department revoked the general and specific licenses that had been issued by the Biden administration.Footnote 18 Affected companies had to wind up their operations by May 27.Footnote 19 According to State Department Spokesperson Tammy Bruce, “all Biden-era oil and gas licenses that benefited Maduro’s regime and lined the pockets of his cronies” were terminated.Footnote 20 A limited license allowed only Chevron to maintain essential Venezuelan operations, as had been permitted between 2020 and 2022.Footnote 21 It is estimated that canceling the licenses will cut Venezuela’s oil output by 150,000 and 350,000 barrels per day.Footnote 22
Second, the executive order authorized the imposition of a twenty-five percent tariff on countries that import Venezuelan oil, directly or indirectly.Footnote 23 A new form of sanction, these secondary tariffs will supplement import duties already imposed.Footnote 24 Authority to determine whether a country has imported Venezuelan oil directly or indirectly is delegated to the secretary of commerce, but once that determination is made the decision to impose tariffs is given to the secretary of state.Footnote 25 Any tariffs so imposed will automatically expire a year after the “last date on which the country imported Venezuelan oil” or at an earlier date as determined by the secretary of commerce.Footnote 26 No secondary tariffs have been imposed to date. Though it will be difficult for the Commerce Department to track shipments, a country like Malaysia, which is suspected of participating in the black market for Venezuelan oil (including transshipments to China) and which is highly dependent on trade with the United States, may decide to prohibit Venezuelan imports due to the risk of tariffs.Footnote 27
Venezuela called the tariffs an “arbitrary, illegal, and desperate measure” that “flagrantly violate[d] international trade rules.”Footnote 28 Chinese Foreign Ministry Spokesperson Guo Jiakun said that “[t]he U.S. has long abused illegal unilateral sanctions and ‘long-arm jurisdiction,’ and grossly interfered in the internal affairs of other countries. China firmly opposes such actions.”Footnote 29 He continued: “We urge the U.S. to cease its interference in Venezuela’s internal affairs, lift its illegal unilateral sanctions against Venezuela, and take steps that contribute to peace, stability, and development in Venezuela and beyond. Trade wars and tariff wars have no winners. Imposing additional tariffs will only inflict greater losses on American businesses and consumers.”Footnote 30 China is the largest purchaser of Venezuelan oil, though the origins of Venezuelan imports are often concealed (through obscure intermediary companies, transshipments, the tampering of tankers’ location signals, the renaming of vessels, and the forging of documents).Footnote 31 Chinese banks are also significant creditors of Venezuela (they are owed about $10 billion), and a decrease in oil revenue may limit Venezuela’s ability to satisfy its Chinese debts.Footnote 32
With the termination of licenses that had allowed shipments to European, Indian, and U.S. markets and the threat of tariffs possibly curtailing the illicit trade of sanctioned oil, Venezuela will need to find other ways to maintain its oil revenue.Footnote 33 Venezuela has asked China “to increase oil purchases and help provide the diluent and light crude needed to process and export Venezuela’s tar-like oil.”Footnote 34 China reportedly, in exchange, wishes to renegotiate the price terms of existing oil contracts to receive additional discounts.Footnote 35 In May, Russia and Venezuela signed a strategic partnership agreement that included a commitment for the two countries to “cooperate in the energy sector in such areas as exploration and development of new oil and natural gas fields, increasing the yield of fields operated by joint ventures . . . and expanding oil trading operations.”Footnote 36 Due to conditions in the contemporary oil market (including a glut in unsanctioned oil, increased U.S. domestic production, competition with sanctioned oil from Iran and Russia, and perhaps a decrease in Chinese demand), Venezuela’s ability to evade U.S. sanctions may be more difficult now than when sanctions were first imposed in 2019.Footnote 37 Analysts said that the secondary tariff threat could increase Chinese and Indian demand for Russia oil.Footnote 38
