Riding the Trump Tornado: A Wild Ride through a Chaotic World
Economic Penalties, Trade Barriers, and Intense Sanctions on Venezuela
Every day seems like a rollercoaster under the Trump administration. Migrants are rounded up, threats fly everywhere, and a brutal bombing campaign has started in Yemen. Support for genocide in Palestine remains strong, and the only constant is the chaos.
As for Venezuela, analysts are throwing around different scenarios for US policy approaches. These range from a repeat of Trump 1.0's "maximum pressure" to pragmatic scenarios that see Washington favoring US corporate interests through foreign policy moves.
An illusion of a more heterodox and less hostile approach was created by an early engagement with the Maduro government. However, recent moves suggest Trump is ramping up the pressure against Venezuela.
Chevron's Game of Musical Chairs
Chevron's license to operate in Venezuela was a good indication of where the US wanted to go. Allowing Chevron to stay would have meant recognizing that regime change was not on the table. Kicking it out, on the other hand, meant strangling Venezuela by all means possible.
In March 2025, following pressure from Florida's "crazy Cuban" representatives, the US Treasury Department withdrew Chevron's sanctions waiver and gave it 30 days, ending April 2, to withdraw. But then, Chevron's deadline was extended to May 27. The question now is whether this is the end of the road for the conglomerate or if it could eventually remain on recurring short-term licenses. This middle-ground policy would save Chevron from losses but discourage it from making significant investments to boost production.
Tariffs and Sanctions: A Haphazard Dance
The most groundbreaking move happened on March 24 when the US president announced 25 percent "secondary tariffs" on imports from countries that are destinations for Venezuelan oil exports. This caught everyone by surprise, not just because secondary tariffs don't exist in international trade, but because the measure is absurd and illogical. Not that irrationality is an obstacle for Trump...
It is important to distinguish between sanctions and tariffs. The first Trump White House introduced primary sanctions, effectively blocking all US persons and entities from dealing with any company where the Venezuelan state held a majority stake. Then, it threatened and levied secondary sanctions against third-country firms dealing with the Venezuelan oil industry.
In recent years, major international corporations have been wary of lucrative opportunities in the Venezuelan energy sector due to the fear of getting hit with secondary sanctions, a phenomenon known as overcompliance. The ones that have engaged have done so with explicit approval from the US Treasury Department.
Secondary sanctions punish a particular agent found "guilty" of breaking the "rules" that the US unilaterally imposes. In that sense, it is a weapon that forces trade into an informal market of ship-to-ship transfers, disguised locations, and re-labeled shipments.
Meanwhile, tariffs are sweeping taxes on specific goods from a given country. Trump's announcement of tariffs on the entire world, with the most absurd formula, has already caused shockwaves. However, secondary tariffs are especially nonsensical because of the total disconnect between the culprits who would trigger the measures and the ones affected.
Furthermore, given the shell game involved in most Venezuelan crude exports, would the US even be able to prove that a given refinery in country X received a shipment from Venezuela? It might not even matter, since Secretary of State Marco Rubio is in charge of imposing these secondary tariffs at his discretion.
A Ridiculous Example
To understand how the newly minted secondary tariffs would play out, let's take a concrete example. If US officials determine that Repsol took Venezuelan crude to Spain, the US could levy import tariffs on Spanish olive oil.
US importers would pay this additional tax, which they could attempt to offset by demanding lower prices from Spanish suppliers. In the end, US consumers would likely foot the bill, or lose access to the products. But in this scenario, why should Repsol care about US importers, US consumers, or Spanish olive oil exporters?
Additionally, the Spanish state cannot force Repsol to stop importing Venezuelan crude, because it does not violate any laws in doing so. If Repsol takes the crude to its refinery in Peru, where does the US impose tariffs?
This example is just for illustration purposes, since a corporation like Repsol would not do anything without explicit approval from Washington. And recent reports indicate that European companies currently involved in Venezuelan joint ventures will likely see their permits curtailed. So, if they end up leaving or stay on with precarious short-term perspectives, they will not trigger tariffs.
But even if tariffs never come into effect, their damage is immediate.
Threats Stronger than Execution
Early 20th-century chess grandmaster Aron Nimzowitch had a saying, "The threat is stronger than the execution." It means that a looming threat on the chessboard can force the opponent into a worse and worse standing, eventually collapsing their position. In the case of sanctions/tariffs, this translates into overcompliance and higher costs of doing business (CODB).
Overcompliance means that companies shy away from doing business with Venezuela, be it buying crude or brokering a vaccine purchase, for fear of being targeted, even if the action does not violate anything. However, as long as there is demand, Venezuelan crude will continue to reach markets. It might require more effort to disguise shipment origins, but most of all, it will mean PDVSA being forced to offer (even) bigger discounts to export its production and inevitably reduced government revenue. This is the price to pay for the higher risk.
While the uncertainty over the implementation of tariffs lingers, there is already a hit on Venezuela's oil revenues.
The Dragon and the Paper Tiger
While China has shown a growing refusal to be intimidated by US threats, most recently going tit-for-tat on tariffs, this has not translated to stronger support for Venezuela. As the sanctions threat loomed large in 2019, state-owned CNPC suspended direct crude purchases and reduced involvement in joint ventures.
As the US becomes more belligerent, it remains to be seen whether Beijing will call Washington's bluff and see if Trump 2.0 truly wants to continue escalating a trade war that will increasingly hit US consumers' pockets.
So far, Chinese leaders have condemned US secondary tariff threats, just like they have regularly blasted sanctions. They have yet to issue instructions to their companies, particularly the so-called "teapot" refiners that operate with Venezuela's extra-heavy oil blends. According to reports, these independent refineries are already working with small profit margins, so removing a source of cheap crude could be fatal and have a domino economic effect, even if Venezuelan imports are relatively small in the big picture.
Paradoxically (for US interests), the added uncertainty and the driving out of Western companies could end up meaning a bigger supply of cheaper oil to China.
A Helping Hand from Iran
One actor that might prove key once more is Iran. It has come to Venezuela's rescue in the past and has consistently shown that it has non-negotiable foreign policy principles, Palestine chief among them.
With an industry that has withstood US-led sanctions for decades, Iran could lift Venezuelan heavy crude and reroute it to China or other destinations. There are also risks for Tehran, which has seen ships blatantly seized by the US in acts of modern-day piracy. In exchange, Iranian companies could supply sorely needed fuel and diluents. It would be far from ideal for Venezuela, since it would mean selling barrels way below market value, but the Maduro government might be bereft of alternatives.
The Trump administration has so far only moved to drive out everyone from Venezuela's oil scene. There is still an opening to corral US corporations into that void, though it would require a lot of spin and bluster. For instance, saying "We are getting cheap oil as payback for all the migrants they sent us." But this would likely mean sidelining Rubio and the hardliners.
The US has refrained from overt regime-change calls, but the pressure is surely building in that direction. Is the Venezuelan government better prepared to handle the blows than five years ago? There are promising and worrying signals alike. But what is nonetheless clear is that for popular movements, the beating heart of the Bolivarian Revolution, surrender is not an option.
The comments made in this article are the author's own and do not necessarily reflect those of the Venezuelanalysis editorial staff.
- The author asserts that daily life under the Trump administration is reminiscent of a rollercoaster.
- Analysts propose different scenarios for US policy regarding Venezuela, ranging from a repeat of previous policies to pragmatic approaches that prioritize corporate interests.
- A change in US policy toward Venezuela was implied by early engagement with the Maduro government, but recent actions indicate a ramping up of pressure.
- Chevron's license to operate in Venezuela was a significant indicator of the US's stance on the regime change.
- Florida's "crazy Cuban" representatives applied pressure on the US Treasury Department, resulting in Chevron losing its sanctions waiver in March 2025.
- Chevron's deadline for withdrawing from Venezuela was extended from April 2 to May 27, creating uncertainty about the conglomerate's future.
- The possibility exists that Chevron could remain on recurring short-term licenses, saving it from losses but discouraging significant investments.
- The US president's announcement of 25 percent secondary tariffs on imports from countries receiving Venezuelan oil exports took everyone by surprise.
- The distinction between sanctions and tariffs is crucial, as the former blocks US persons and entities from dealing with particular companies, while the latter are taxes on specific goods from a given country.
- The US has threatened and levied secondary sanctions against third-party firms dealing with the Venezuelan oil industry.
- Overcompliance, or fear of being targeted by secondary sanctions, has deterred many international corporations from engaging in lucrative opportunities in the Venezuelan energy sector.
- European companies operating in Venezuelan joint ventures may see their permits curtailed.
- If secondary tariffs are enforced, their damage can be immediate due to overcompliance and higher costs of doing business.
- The example of US tariffs on Spanish olive oil due to imported Venezuelan crude illustrates the nonsensical nature of the new secondary tariffs.
- The threat of secondary tariffs may have an immediate deterrent effect, as companies will shy away from dealing with Venezuela despite there being demand for its crude.
- The EU and China have been the largest importers of Venezuelan crude in recent years.
- China has shown a growing reluctance to be intimidated by US threats, but has not translated to stronger support for Venezuela.
- Beijing has regularly expressed opposition to US sanctions against Venezuela.
- The added uncertainty and driving out of Western companies could lead to a larger supply of cheaper oil for China.
- Iran has come to Venezuela's aid in the past and could potentially lift Venezuelan heavy crude and reroute it to China or other destinations.
- Tehran faces risks when rerouting Venezuelan crude due to US seizures of Iranian ships, but the situation may be worth the risk if it means supplying much-needed fuel and diluents to Venezuela.
- The US has mainly focused on driving out everyone from Venezuela's oil scene, leaving an opportunity for US corporations to fill the void with their own interests in mind.
