U.S. President Donald Trump has imposed a 25% tariff on all imports from nations that buy oil or gas from Venezuela. The policy, in effect from April 2, is intended to pressure countries that continue to trade with the South American nation. Trump declared April 2 as ‘Liberation Day’ for the U.S. economy, underlining his position against what he terms unfair trade practices.
The action has broad implications for international trade, specifically for India and China, who have been key purchasers of Venezuelan oil. Specialists caution that it may result in increased procurement prices, destabilize supply chains, and contribute to global inflationary pressures.
Trump’s Rationale for the Tariff
On March 24, Trump explained why he was imposing the tariff in a statement on Truth Social. He blamed Venezuela for sending violent criminals to the U.S. secretly, including members of the Tren de Aragua gang, which has been named a “Foreign Terrorist Organization.”
“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. Among the gangs they sent to the United States, is Tren de Aragua, which has been given the designation of “Foreign Terrorist Organisation,” Trump wrote.
Trump also condemned Venezuela for being adversarial to America, saying any nation that is buying oil or gas from them will be caught up in the 25% tariff on every transaction with America. He guaranteed that all such U.S. law enforcement had been informed about the action.
Addressing journalists, Trump made clear that the tariff would be on top of any current levies on imports. “That’s on top of existing tariffs — yes,” he affirmed.
Even though Trump decided to sanction other countries for buying Venezuelan oil, the US remains a major buyer. According to the US Commerce Department, Washington imported $5.6 billion worth of Venezuelan oil and gas in 2024. This followed the Biden administration removing sanctions on Caracas temporarily in 2023, though they were reinstated in April 2024 after allegations that Venezuelan President Nicolás Maduro had not conducted free elections.
Despite sanctions having been reimposed, Chevron based in the U.S. still extracts Venezuelan oil under a joint-venture license, extended to May 27.
Trump’s action was denounced by Venezuela strongly, and Maduro labeled it a “new aggression” from the U.S. He derided the sanctions, stating, “They can sanction and impose tariffs on whatever they want, what they cannot sanction is the love and patriotism of the Venezuelan people.”
Indian Implications: Spiking Costs and Challenges in Oil Diversification
India, a heavy crude importer, also began purchasing Venezuela crude again in December 2023 after an intervening period of three years after it had initially faced U.S. sanctions. In 2024, 22 million barrels of Venezuelan imports arrived in India, representing 1.5% of Indian total crude importations.
India’s Venezuelan oil imports in December 2023 averaged 191,600 barrels per day (bpd) and increased to 254,000 bpd in January 2024. Imports slowed in early 2024, reaching just 65,000 bpd in January and 93,000 bpd in February, based on Kpler data.
If Trump’s tariffs are implemented, Indian refiners will end up paying more for procurement, and the nation will need to re-tune its oil import strategy. According to experts, India might have to depend more on Russian crude, an action that may put it at loggerheads with Western countries.
The imports of oil for India are growing as well. India’s reliance on oil imports was 88.2% between April to February, in comparison to the same period in 2024 and 87.7%. Increases in oil prices may contribute towards inflationary impulses, impacting carriage, production, and economic activity as a whole.
India previously depended on Venezuelan crude before the U.S. sanctions in 2019, with the country ranking as New Delhi’s fifth-largest supplier that year. However, since then, India has diversified its imports, focusing more on Russia, the Middle East, and the U.S.
China Faces the Biggest Setback
Although India will feel the effects of Trump’s tariffs, China will suffer the most. China is Venezuela’s biggest buyer of oil and will receive 351,000 barrels per day from the country in 2024, said Lipow Oil Associates.
Energy experts are of the opinion that Trump’s recent tariff action is in line with his overall strategy to take on China. Kpler’s head oil analyst for the Americas, Matt Smith, said, “This announcement by the Trump administration seems to be one more move aimed at China.”
Trump has also already slapped a 20% tariff on all Chinese imports into the U.S., with steel and aluminum imports also facing an extra 25% tariff. If Chinese purchases of Venezuelan oil keep going, the 25% tax will take the 45% tariff on Chinese imports into the U.S., yet another step higher in trade tensions between the two economic powerhouses.
U.S.-India Trade Talks Amid Tariff Concerns
The timing of Trump‘s tariff announcement also coincides with the visit of a high-level U.S. delegation to India. Headed by Assistant U.S. Trade Representative for South and Central Asia, Brendan Lynch, the four-day visit is likely to be centered on trade and investment.
The U.S. Embassy in India has stated that trade deals and tariff talks would be major areas of discussion. India has been aggressively pursuing trade agreements offering tariff concessions in return for greater investment pledges.
Crude oil continues to be India’s biggest import, and demand is anticipated to increase even more. As per the Petroleum Planning & Analysis Cell, consumption of petroleum products is anticipated to increase by 4.7% in FY26 to 252.93 million tonnes.
A Ripple Effect Across Global Markets
Trump’s 25% tariff on Venezuelan oil is set to redefine world trade. While the U.S. says it is trying to stem Venezuela’s influence, the action will affect major economies such as India and China.
India, which is already grappling with high oil dependence, has to contend with increased costs and revisit its energy diversification plan. China, the biggest buyer of Venezuelan crude, meanwhile, is hit with extra trade barriers, further escalating its economic war with the U.S.
As the April 2 deadline nears, countries will need to choose whether to keep buying Venezuelan oil or switch to other sources, potentially disrupting supply chains and driving up global oil prices.
