Trump is targeting Venezuela's oil exports, and China is caught in the middle
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- Trump announced secondary tariffs on countries buying Venezuelan oil, effective April 2.
- The tariffs aim to weaken President Nicolás Maduro's regime and indirectly target China's oil imports.
- Global oil prices rose on Trump's indirect tariffs as they raise supply concerns.
US President Donald Trump has announced an unexpected tariff that would hit China.
On Monday, Trump introduced what he called "secondary tariffs" on all countries buying oil from Venezuela. This means countries purchasing oil and gas from Venezuela would have to pay a 25% tariff to the US if they also trade with America.
On Monday, Trump signed an executive order on the action. The tariff — which appears to be a Trump invention — takes effect on April 2. It aims to pressure the already heavily sanctioned government of Venezuelan President Nicolás Maduro.
"These tariffs aim to sever the financial lifelines of Nicolás Maduro's corrupt regime and curb its destabilizing influence across the Western Hemisphere," according to a fact sheet on Trump's executive order.
"The Maduro regime poses an unusual and extraordinary threat to the national security and foreign policy of the United States," it said.
Crude oil futures rose about 1% on the news. Global energy prices have been broadly depressed in recent months due to global growth concerns and ample supply.
China is a big market for Venezuela
Although the tariffs are targeted at all countries that buy Venezuelan oil, analysts say they would most affect China, which accounted for 55% of the South American country's crude and fuel exports in February, according to Reuters estimates.
Venezuelan oil is sanctioned by the US, so much of the energy trade passes through dark channels. Venezuela is not one of China's biggest sources of oil — Saudi Arabia and Russia are its top suppliers.
"These secondary tariffs are an indirect sanction to degrade Venezuela's oil supply capability and hurt China's teapot refining system," wrote Mukesh Sahdev, the global head of commodity markets at research firm Rystad Energy.
Sahdev said Chinese "teapots" — independent oil refiners in China — would struggle for crude oil supply and resort to stock drawdowns.
Should the tariffs persist into the summer — when crude oil demand typically rises due to air cooling needs — prices of the commodity could get a further boost, he added.
Beijing hit back at this set of tariffs.
"The US has long abused illegal unilateral sanctions and 'long-arm jurisdiction,' and grossly interfered in the internal affairs of other countries," said Guo Jiakun, a spokesperson at the Chinese foreign ministry, on Tuesday.
"China firmly opposes such actions. We urge the US to cease its interference in Venezuela's internal affairs, lift its illegal unilateral sanctions against Venezuela, and take steps that contribute to peace, stability, and development in Venezuela and beyond," Guo said at a scheduled press conference.