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Trump imposes 25% tariff from April 2 on countries buying

Venezuela oil

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Oil futures jump nearly 1.5% on planned tariff

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China is biggest consumer of Venezuelan oil

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Trump extends Chevron's ( CVX ) wind-down period in Venezuela to

May 27

(Adds comments from Chinese foreign ministry in paragraphs 6-7,

20)

By Timothy Gardner and Marianna Parraga

WASHINGTON/HOUSTON March 24 (Reuters) - U.S. President

Donald Trump on Monday issued an executive order declaring that

any country buying oil or gas from Venezuela will pay a 25%

tariff on trades with the U.S., while his administration

extended a deadline for U.S. producer Chevron ( CVX ) to wind

down operations in the South American country.

Trump's new policy relieves some pressure on Chevron ( CVX ) to

quickly exit Venezuela after the U.S. Treasury Department on

March 4 gave it 30 days to wind down operations. Trump had

issued the initial wind-down after he accused President Nicolas

Maduro of not making progress on electoral reforms and migrant

returns.

Treasury said on Monday it would wait seven more weeks until

May 27 before terminating a license that the U.S. has granted to

Chevron ( CVX ) since 2022 to operate in sanctioned Venezuela and export

its oil to the United States.

Chevron's ( CVX ) extension came hours after Trump announced the new

tariff, saying Venezuela has sent "tens of thousands" of people

to the United States who have a "very violent nature."

The two moves temporarily focus Trump's pressure on buyers

of Venezuelan crude oil other than the United States, such as

China, though it is uncertain how his administration will

enforce the tariff.

"The United States has long abused illegal unilateral

sanctions and so-called long-arm jurisdiction to grossly

interfere in the internal affairs of other countries," said Guo

Jiakun, spokesperson at the Chinese foreign ministry, on

Tuesday.

"China firmly opposes this."

David Goldwyn, president of consultancy Goldwyn Global

Strategies, said the moves allow a compromise between those in

the Trump administration who were concerned about pushing

Western companies out of Venezuela and those, including

Secretary of State Marco Rubio, who are concerned about

enriching Maduro's administration.

"This potentially provides a sweet spot for both of them,"

Goldwyn said.

Punishing foreign buyers of Venezuela's oil with tariffs

could hit its crude exports, forcing price discounts, and have a

similar effect to secondary sanctions on the country that Trump

imposed during his first term in 2020.

The extension of Chevron's ( CVX ) wind-down period would secure

payments to the company for oil cargoes delivered to U.S.

customers, while avoiding a collapse in crude volumes exported

from Venezuela in coming weeks, especially to the U.S.,

according to analysts and sources.

Trump, who has made illegal migration one of the top

priorities of his administration, earlier this month invoked

the 1798 Alien Enemies Act to justify the deportation of alleged

members of Venezuelan gang Tren de Aragua without final removal

orders from immigration judges.

Chevron ( CVX ) said it had no comment.

Venezuela's government said it firmly and categorically

rejected the "new aggression" announced by Trump.

"This arbitrary, illegal, and desperate measure, far from

weakening our resolve, confirms the resounding failure of all

sanctions imposed against our country," the Venezuelan

government said in a press release.

SWITCH TO RUSSIAN?

The 25% tariff to be imposed on buyers of Venezuelan oil

will take effect on April 2 and would be combined with any

existing tariffs, according to the executive order. The tariff

will expire one year after the country last imported Venezuelan

oil, the order said.

The tariff would apply to countries that buy Venezuela oil

through third parties, the order said.

Oil prices rose 1% on Trump's tariff announcement, although

the gains were capped as the U.S. extended the wind down period

of the Chevron ( CVX ) license.

Oil is Venezuela's main export and China, which is already

the subject of U.S. tariffs, is the largest buyer. In February,

China received directly and indirectly some 503,000 barrels per

day of Venezuelan crude and fuel, some 55% of total exports.

"We call on the United States to stop interfering in

Venezuela's internal affairs and abolish illegal unilateral

sanctions against Venezuela," said the Chinese foreign ministry

spokesperson.

India, Spain, Italy and Cuba are other consumers of

Venezuelan oil.

Tariffs imposed by China on imports of certain types of

Venezuelan oil in past years led to a decline in the volume of

Venezuelan crude received by Chinese buyers, which ultimately

forced state company PDVSA to widen price discounts to its most

important market.

Rubio this month said foreign buyers of Venezuelan oil would

be notified of a policy change, but many joint-venture partners

of PDVSA continued taking cargoes, according to company

documents.

PDVSA is also readying a plan to reorganize operations at

its largest joint venture with Chevron ( CVX ), the Petropiar project at

the Orinoco Belt, and secure oil exports from there.

Maduro has rejected U.S. sanctions, saying they are

illegitimate measures that amount to an "economic war" designed

to cripple Venezuela. But he has cheered what his government

says is the country's resilience despite the measures.

Goldwyn said the new tariffs could have the ironic effect of

increasing global demand for Russian oil. "China and India are

unlikely to risk additional tariffs to access Venezuelan heavy

oil, when they can buy Russian crude."