On 24 March 2025, President Trump issued Executive Order 14245 authorizing Secretary of State Marco Rubio to impose a 25 percent tariff on all goods imported into the United States from any country that directly or indirectly imports Venezuelan oil (i.e., crude oil or petroleum products extracted, refined, or exported from Venezuela).1 The Secretary of State can impose these "secondary tariffs" if Secretary of Commerce Howard Lutnick determines that a country has imported Venezuelan oil directly or indirectly on or after 2 April 2025. The tariffs under E.O. 14245 would be additive to any tariffs already imposed on the country under other authorities, such as International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701 et seq.), section 232 of the Trade Expansion Act of 1962, or section 301 of the Trade Act of 1974. These secondary tariffs expire within one year or at an earlier date subject to the decision of the Secretary of Commerce.
The potential impacts of the secondary tariffs could include changes in oil prices, increased evasion efforts, and the possibility of purchasing Venezuelan oil at a discount.
This novel use of secondary tariffs could be seen as analogous to so-called secondary sanctions that impose costs on third-country actors that provide support, supply services to, or engage in commercial activities with foreign persons sanctioned by the United States.2 However, secondary tariffs and secondary sanctions have different risk considerations and impacts:
- Secondary tariffs target all imports from a country even if only one specific firm in the country imports Venezuelan oil directly or indirectly. For example, an oil importer in Spain that continues to import Venezuelan oil after 2 April 2025 can cause the imposition of a 25% tariff on all goods exported from Spain to the United States. In contrast, secondary sanctions target only a specific firm. For example, an oil importer engaged in Venezuelan oil imports would be the specific (and lone) target of sanctions or related restrictions. Given the possible effects of one company's actions leading to sweeping consequences that impact the entirety of a country's exports to the United States, countries may need to develop legal mechanisms to monitor or restrict oil imports from Venezuela to protect their economies.
- Secondary tariffs may impose broad economic costs on the economies of both the targeted country as a whole and the United States by affecting the overall trade volumes of both countries and causing broad-based cost and price effects. Secondary sanctions, in contrast, target only a specific business or certain financial institutions with more limited impact on the economies of the United States and the country where the target is located. The broader economic impact of the imposition of secondary tariffs is likely to result in a more complicated diplomatic dynamic between the United States and any affected country, as well as impacting the diplomatic relationship between Venezuela and any affected country.
- Secondary tariffs will lead to an increasingly uncertain economic environment that will impact business leaders' decisions, especially with respect to supply chains and possible investments.
Background
Purpose. E.O. 14245 reflects efforts by the current administration to ramp up pressure on Venezuela in conjunction with the wind-down of Chevron's operations in Venezuela.3 In particular, the E.O. cites to (1) the actions and policies of the Nicolas Maduro regime, including the systematic undermining of democratic institutions, public corruption, and the destabilization of the region due to the forced migration of millions of Venezuelans; (2) the activities of the Tren de Aragua gang, recently designated as a Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT)4; and (3) Venezuela's ongoing destabilizing actions, including its support for illicit activities.
Requirements. In order for the Secretary of State to impose such tariffs, the Secretary of Commerce must first determine whether a country has imported Venezuelan oil, followed by the Secretary of State's determination to impose a 25 percent tariff against such a country.
Time-Limited Tariffs. Tariffs that may be imposed pursuant to E.O. 14245 will automatically expire one year after the last date on which the country imported Venezuelan oil, or at an earlier date if the Secretary of Commerce determines that such tariffs must be removed. Limiting the time of the application of a tool of economic statecraft (i.e., secondary tariffs in this case) may affect the risk calculus for target countries.
Administration. While the determination for the imposition of tariff is delegated to the Secretary of State, most of other responsibilities related to this new economic tool are delegated to the Secretary of Commerce, including determining whether a country has imported Venezuelan oil, directly or indirectly; and issuing regulations, guidance, and determinations as necessary to implement E.O. 14245. However, it is unclear whether the Secretary of Commerce will be able to establish exemptions or a licensing regime based on this regulatory authority.
Country Impacts
Countries that face potential E.O. 14245 tariffs will face challenging decisions on whether to implement mechanisms to monitor and prevent Venezuelan oil imports, particularly if the potential tariff impact on the country's economy might be significant.
Tariffs that may be imposed pursuant to E.O. 14245 are supplemental to other tariffs already applicable to imports from a country. For example, if the Secretary of State determines to impose such tariffs against goods from country A that were already subject to a 10 percent tariff rate, the new tariff rate will be 35 percent for goods imported from Country A.
E.O. 14245 explicitly mentions China in a way that suggests that China could potentially be subject to tariffs pursuant to E.O. 14245. Section 3 (e) of E.O. 14245 states that if such tariffs are imposed against China, that tariff shall also apply to both the Hong Kong Special Administrative Region and the Macau Special Administrative Region, as a measure to reduce the risk of transshipment and evasion. This is notable since China was the top importer of Venezuelan crude oil and fuel, receiving some 503,000 barrels per day (bpd) in February (approximately 54 percent of Venezuela's oil and fuel export in February).5 However, based on U.S. government data, Venezuela was not among the top ten sources of oil in 2024 for energy-hungry China, a fact that may have an impact on whether China will continue to import Venezuelan oil.6
The United States trails behind China in importing Venezuelan oil, receiving 239,000 bpd (approximately 26 percent of Venezuela's oil and fuel exports in February). However, with the recent action of the Department of the Treasury's Office of Foreign Assets Control (OFAC) requiring the gradual halt of Chevron's activities in Venezuela, it is expected that the U.S. import of Venezuelan oil will stop by 27 May 2025, unless extended.7
Europe imported 69,200 bpd of Venezuelan oil in February 2025 (approximately 7 percent of Venezuela's oil and fuel exports in February), making Europe the third-largest importer of Venezuelan oil in February 2025. 8 It is worth noting, however, that Venezuelan oil constituted only a small portion of overall EU oil imports in 2024. Specifically, it accounted for just 0.4% of the EU's total petroleum-related imports.9 Additionally, OFAC has reportedly revoked Venezuela-related authorizations previously granted to some European oil companies and provided a wind-down period through 27 May 2025.10
India also imported oil from Venezuela in February 2025, but similar to China and the EU, Venezuela is not a major source of oil for India.
Legality of Tariffs Based on IEEPA
The E.O. cites IEEPA as the authority for this novel action. Whether IEEPA, specifically 50 U.S.C. 1702(a), provides authority to the president to impose tariffs to address a "national emergency" has been the subject of some debate and might be subject to future judicial scrutiny.11
Secondary Tariff Against Other Targets
In an interview on 30 March 2025, President Trump stated that he would consider the imposition of secondary tariffs against Russia and Iran,12 suggesting his administration's willingness to use secondary tariffs as a tool of foreign policy. If imposed, secondary tariffs against Russia and Iran could increase the price of oil, especially considering that currently the United States does not punish third countries that purchase oil from Russia.
Potential Responses
As result of the imposition of secondary tariffs against Venezuela and potentially other countries in the future, we may see the following responses:
- Changes in oil prices. Based on the U.S. government data, Venezuela is a small contributor to the global oil supply, as it produced only 0.8% of total global crude oil in 2023. This will limit the impact of the imposition of secondary tariff against Venezuela on global oil prices. However, the impact on oil prices may be more severe if secondary tariffs are used against Russia in the future, which, based on U.S. government data, produced 11% of world's oil supply in 2023.
- Increased evasion efforts around Venezuelan oil. Sanctions evaders will likely use existing techniques, like leveraging a shadow fleet, or may find new ways for evading the impact of U.S. secondary tariffs.
- Discount on the price of crude oil and petroleum products from Venezuela. To find potential buyers of its oil, Venezuela will likely have to sell its oil at a discount to compensate for the additional risks to a buyer and the elevated costs associated with such a transaction.
Our team of experts at K2 Integrity are closely following the new administration's measures related to sanctions, export controls, inbound and outbound investments, and other trade restrictions, including the use of tariffs. Please reach out to us if you need support in navigating these fast-paced changes.
footnoteS
1 Federal Register, Executive Order 14245, Imposing Tariffs on Countries Importing Venezuelan Oil (24 March 2025), https://www.federalregister.gov/public-inspection/2025-05440/impose-tariffs-countries-importing-venezuelan-oil.
2 The "secondary tariffs" may also be viewed as comparable to restrictions against vessels or aircraft that called or landed in certain sanctioned countries (i.e., Cuba and North Korea), which prevent them from entering calling ports or landing in the United States; however, the nature of those restrictions is different from tariffs against another country.
3 Office of Foreign Assets Control, General License No. 41B under Venezuela Sanctions Regulations, issued on 24 March 2025, https://ofac.treasury.gov/media/934071/download?inline.
4 See also K2 Integrity, "Escalation Against Cartels: U.S. Designates International Cartels as Foreign Terrorist Organizations and Specially Designated Global Terrorists" (27 February 2025), https://www.k2integrity.com/en/knowledge/policy-alerts/us-designates-international-cartels-as-foreign-terrorist-organizations/.
5 Marianna Paraga, "Venezuela's Oil Exports Rose in Feb Ahead of Chevron's License Termination," Reuters (4 March 2025), https://www.reuters.com/business/energy/venezuelas-oil-exports-rose-feb-ahead-chevrons-license-termination-2025-03-04/.
6 United States Energy Information Administration, "China's Crude Oil Imports Decreased From a Record as Refinery Activity Slowed" (11 February 2025), https://www.eia.gov/todayinenergy/detail.php?id=64544.
7 General License No. 41B, https://ofac.treasury.gov/media/934071/download?inline.
8 While E.O. 14245 authorizes the imposition of tariffs against a country, it is unclear how the U.S. government will impose these tariffs against economic unions like the EU, where goods and services move freely.
9 MNI, "Macro Analysis: EU Oil Imports From Venezuela Small Enough to Drop If Needed" (24 March 2025), https://www.mnimarkets.com/articles/eu-oil-imports-from-venezuela-small-enough-to-drop-if-needed-1742836024458
10 See Maurel & Prom Publications, "OFAC Revokes M&P's Venezuela License, With a Wind-Down Period Granted Until 27 May 2025" (31 March 2025), https://www.maureletprom.fr/en/documents/download/1776/ofac-revokes-m-ps-venezuela-license-with-a-wind-do;
11 50 U.S.C. 1702(a).
12 NBC News, "Trump Tells NBC News He's 'Angry' and 'Pissed Off' at Putin" (30 March 2025), https://www.nbcnews.com/politics/donald-trump/trump-angry-putin-zelenskyy-iran-sanctions-rcna198729.
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