Trump announced yesterday that “on or after April 2, 2025, a tariff of 25 percent may be imposed on all goods imported into the United States from any country that imports Venezuelan oil, whether directly from Venezuela or indirectly through third parties.”
This is, functionally, another 25 percent tariff on China–on top of the 20 percent tariffs already in effect–Trump confirmed it. In February, China purchased 55 percent of Venezuela’s total oil exports. In 2023 that figure was 68 percent. Additional 25 percent tariffs must now be factored into imports from other smaller Venezuelan oil exporters like Spain, Brazil, Italy, France the Netherlands and the, uh, United States.
Today, Venezuelan oil purchases from China are slowing, but it’s too early to say whether this is having Trump’s intended effect, as Reuters reports this move “caught traders and refiners in China by surprise.” Even if China follows his command and begins to wind down its oil purchases from Venezuela, they buy too much from the country with the largest proven oil reserves in the world for this to happen overnight. Add in the fact that China’s economy is slowing, and it’s not that simple to just dial back a record-setting global oil purchasing pace for an economy that demands more energy by the day, not less (one way to simplify this process would be to kill all demand everywhere by plunging the globe into a huge recession, but I digress).
So if the baseline tax on all imported goods from China is going to be 45 percent in April before the reciprocal tit-for-tat trade warfare begins, that means the tariffs that J.P. Morgan and Goldman Sachs admitted they did not price into the market in February have more than doubled the new baseline that the market scrambled to reach in the past few weeks as it pulled back into a correction. This isn’t the worst part, as any non-MAGA economist will tell you, the real damage in trade wars happens after they begin, not with the initial round of tariffs. It’s not at all out of the question now that by the end of May, everything the United States imports from China could have well over a 50 percent tax attached to it. Buckle up.
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