Trade of Venezuelan Oil to China Stalls After New Trump Order

The trade of Venezuelan oil to China has come to a sudden halt following a new order from U.S. President Donald Trump. The order, which threatens a 25% tariff on any country importing Venezuelan oil, has created significant uncertainty and disruption in the global oil market. This move is part of a broader strategy by the Trump administration to exert economic pressure on countries that engage with the Maduro regime in Venezuela, which the U.S. has accused of stealing elections, pillaging its people, and colluding with enemies.

The impact of this order is particularly acute for China, which has been the largest buyer of Venezuelan oil. In 2023, China imported 68% of the oil exported by Venezuela, according to a 2024 analysis by the U.S. Energy Information Administration. The new tariffs, which will add 25% to the cost of Chinese goods imported into the United States, could significantly impact China's trade with the U.S. and force it to seek alternative suppliers.



The order, signed on March 24, 2025, states that the 25% tariff will take effect on April 2, 2025, and will expire a year after the last date that a country has imported Venezuelan oil—or sooner if Washington decides so. This move comes as the deportation pipeline between the United States and Venezuela was suspended last month when Trump claimed Caracas had not lived up to a deal to quickly receive deported migrants. Venezuela subsequently said it would no longer accept the flights. However, Caracas said Saturday it had reached an agreement with Washington to resume repatriations after which nearly 200 Venezuelan citizens were deported from the United States via Honduras.

The tariffs are expected to disrupt the supply chains of countries that rely on Venezuelan oil. For instance, China, which bought 68% of the oil exported by Venezuela in 2023, will face a 25% tariff on all its trade with the United States if it continues to purchase Venezuelan oil. This could force China to seek alternative suppliers, potentially leading to a shift in global oil trade routes and partnerships.

The United States itself imports a significant amount of oil from Venezuela. In January 2025, the United States imported 8.6 million barrels of oil from Venezuela, out of roughly 202 million barrels imported that month. The extension of Chevron Corp.'s lease to pump and export Venezuelan oil until May 27, 2025, suggests that the U.S. will continue to rely on Venezuelan oil to some extent, but the overall supply dynamics could change as other countries adjust their purchasing behaviors.

The tariffs could also affect the operations of independent refiners, known as teapots, in countries like China. These refiners, which favor the heavy Merey grade of Venezuelan oil, may face significant challenges in finding alternative feedstock at competitive prices. For example, a top executive with a regular Chinese trader of Venezuelan oil said, "The worst thing in the oil market is uncertainty. We won't dare touch the oil for now." This sentiment reflects the broader market reaction to the tariffs and the potential disruption they could cause.

The tariffs could lead to increased costs for Chinese goods, potentially making them less competitive in the U.S. market. This could result in a decrease in Chinese exports to the U.S., which could have a ripple effect on China's economy. Politically, the tariffs could strain relations between the U.S. and China, as China has long opposed unilateral sanctions and "long-arm jurisdiction" by the U.S. In response to the tariffs, China could take several actions:

1. Seek Alternatives: China could look for alternative sources of oil to reduce its reliance on Venezuelan oil. This could include increasing imports from other countries or investing in domestic oil production.

2. Retaliatory Measures: China could impose retaliatory tariffs on U.S. goods or take other measures to protect its interests. For example, China has already imposed counter tariffs and launched probes into foreign companies in response to previous U.S. tariffs.

3. Diplomatic Pressure: China could use diplomatic channels to pressure the U.S. to lift the tariffs. This could include working with other countries to form a united front against the U.S. tariffs or using its influence in international organizations to condemn the U.S. actions.

4. Continue Purchases: Despite the tariffs, China may continue to purchase Venezuelan oil, as the oil makes up a small portion of its total imports. This could be seen as a defiant move against the U.S., but it could also lead to further escalation of tensions between the two countries.

The new tariffs imposed by the Trump administration on countries purchasing Venezuelan oil are likely to disrupt global oil supply chains, increase demand for alternative suppliers, and create price volatility in the market. These changes could have far-reaching implications for the global oil market dynamics, affecting both supply and demand. The impact on China, given its significant reliance on Venezuelan oil, is particularly noteworthy, and the country's response to these new tariffs will be closely watched by the global community.