 "Trump announces 25% tariff on Venezuelan oil: What's at stake for India?")
US President Donald Trump announced on Monday that a 25 per cent tariff would be imposed on countries purchasing oil and gas from Venezuela. This move could significantly impact Asian markets, including India and China, while adding to global trade uncertainties.
"Venezuela has been very hostile to the United States and the Freedoms which we espouse," Trump said on his Truth Social platform. "Therefore, any country that purchases oil and/or gas from Venezuela will be forced to pay a tariff of 25 per cent to the United States on any trade they do with our country."
The order, signed by Trump on Monday, stipulates that the tariff will take effect as early as April 2 and will apply broadly to both direct and indirect buyers of Venezuelan crude. Under the order, the tariff will remain in place for one year from the last instance of Venezuelan oil imports by any affected country unless the US decides to lift it earlier. Read: Donald Trump to impose auto tariffs soon, hints at reciprocal duty breaks
How will this move impact India?
The tariff could have economic consequences for India and China, both of which are key importers of Venezuelan crude. Venezuela has been a significant oil supplier for these nations, as well as for the US and Spain.
India was the largest buyer of Venezuelan crude in December 2023 and January 2024, with imports rising from approximately 191,600 barrels per day in December to over 254,000 barrels daily in January. That month, India accounted for nearly half of Venezuela’s total oil exports, which stood at about 557,000 barrels per day.
For 2024, India’s Venezuelan crude imports totalled 22 million barrels, representing around 1.5 per cent of the country’s overall crude oil purchases. Meanwhile, in February, China imported around 500,000 barrels per day from Venezuela, while the US brought in about 240,000 barrels daily, according to a report by AFP.
Trump’s recent decision could affect companies such as Mukesh Ambani’s Reliance Industries Limited, which restarted crude oil imports from Venezuela after the US relaxed sanctions on the Latin American nation in late 2023.
Venezuela-US relations: A brief history
Historically, Venezuela was a major supplier of oil to the US, especially during the 1990s when it accounted for a substantial portion of US oil imports. In 2006, bilateral trade peaked at over $50 billion, primarily driven by oil exports from Venezuela, which were crucial for US energy needs.
However, relations soured after Hugo Chavez assumed the presidency in 1999, leading to increased tensions due to his anti-US rhetoric and socialist policies. Despite these political strains, economic ties remained relatively strong until recent years. By 2018, US exports to Venezuela were valued at approximately $5.97 billion, but this figure has since declined sharply, reaching only $2.43 billion in 2023.
In 2023, Venezuela exported $3.81 billion to the US, mainly consisting of crude petroleum, while US exports included refined petroleum and agricultural products. The ongoing political crisis and sanctions have significantly impacted trade volumes, with both countries experiencing a downward trend in exports over the past five years. As of March 2025, new tariffs announced by President Trump on Venezuelan oil could further complicate this already fragile economic relationship.
Trump’s decision comes amid ongoing tensions between Washington and Caracas. Last month, the US suspended deportation flights to Venezuela, citing the latter’s alleged failure to uphold an agreement to accept deported migrants. In response, Venezuela announced it would no longer accept such flights. However, over the weekend, Caracas confirmed a new arrangement with Washington, which led to the deportation of nearly 200 Venezuelan nationals via Honduras.
Oil market reaction
Following Trump’s announcement, oil prices rose by 1 per cent on Monday. Brent crude futures increased by 84 cents (1.2 per cent) to reach $73 per barrel, while US West Texas Intermediate crude climbed 83 cents (1.2 per cent) to $69.11 per barrel.
However, price hikes were moderated as Washington allowed Chevron until May 27 to wind down its oil operations and exports from Venezuela, extending an earlier 30-day deadline set in early March. This extension provides some relief to Chevron while applying additional pressure on other Venezuelan crude buyers.
Trump’s tariff strategy
Since assuming office in January, Trump has taken an aggressive stance on trade, imposing tariffs on both allies and adversaries to advance US economic and diplomatic interests. The decision on whether to enforce the Venezuelan oil tariff will be made by the secretary of state in consultation with other agencies.
Speaking to reporters, Trump confirmed that the 25 per cent tariff would be imposed in addition to existing duties. He referred to April 2 as "Liberation Day" for the US economy and hinted at further reciprocal tariffs targetting specific trading partners.
(With agency inputs)