Under President Donald Trump, the United States has implemented a challenging new policy. It imposes a 25-percent tariff on any country that purchases oil from Venezuela. It’s no coincidence that now, as Trump is stepping up his pressure campaign against Venezuela. This country has massive amounts of crude oil and natural gas in the ground. The Organization of the Petroleum Exporting Countries (OPEC) has valued Venezuela's petroleum exports at approximately $13.68 billion for the year 2023. Despite its wealth in natural resources, Venezuela has faced significant economic challenges, exacerbated by declining oil production and falling oil prices since the mid-2010s.
As with most things in Venezuela, the bilateral relationship has been highly contentious and polarizing. The Maduro government is under scrutiny for charges of severe human rights violations. These actions, like the torture and arbitrary detention of dissidents, have caused diplomatic relations to collapse. The Trump administration has carped most vocally on these areas. Under this government, President Trump went as far as to offer a $15 million reward for information that results in the arrest of Venezuelan President Nicolas Maduro.
Economic Challenges and Declining Oil Production
Venezuela oil production has faced a severe drop, losing 1.2 million bpd in the last 10 years. In 2000, production jumped to an unprecedented 3.2 million barrels per day. Yet, as of September 2023, it had cratered to a mere 735,000 barrels per day. The decline has only exacerbated Venezuela’s economic collapse. In recent months, millions of Venezuelans have streamed across the country’s borders in search of relief from extreme scarcity, including for necessities such as food and medicine. More than 7.7 million Venezuelans have fled their home country to find a quality of life elsewhere.
The country’s economic crises have been made worse by a sudden decline in global oil prices in the mid-2010s. The US, under President Trump's "maximum pressure" campaign, has imposed heavy sanctions on Venezuela's government, aiming to weaken Maduro's grip on power. These sanctions are the root cause behind the severe impact on Venezuela’s ability to conduct international trade and finance.
Diplomatic Tensions and Humanitarian Concerns
Venezuela has already rejected the undocumented migrants that the Biden administration has tried to forcibly deport. This decision has engendered further tension between the two countries. President Trump has repeatedly equated migration with criminality, heightening sensationalized fears of a purported “invasion” of criminals to the United States. In a related statement, Trump charged that Venezuela was sending violent felons to the US.
"Venezuela has purposefully and deceitfully sent to the United States, undercover, tens of thousands of high level, and other, criminals, many of whom are murderers and people of a very violent nature," said US President Donald Trump.
With no diplomatic relations between the two countries, any attempts to resolve these matters through discussion are still greatly hampered. The US administration's focus remains on applying pressure to compel changes within Venezuela's government.
New Tariffs and Future Implications
The imposition of tariffs on countries buying Venezuelan oil would be a noteworthy break from the US long-standing foreign policy toward Venezuela. President Trump announced the decision, which is part of larger impetus to economically isolate Venezuela.
"Therefore, any Country that purchases Oil and/or Gas from Venezuela will be forced to pay a Tariff of 25% to the United States on any Trade they do with our Country," stated President Trump.
This step has the power to disrupt global oil markets. Venezuela’s trading partners that import Venezuelan oil must consider their own trade policies in light of these new tariffs. According to the current terms of its licensing agreement, Venezuela must end its dealings with Chevron by May 27. This deadline emphasizes the urgency and seriousness of the situation.
