April Trade Policy Developments Under the Trump Administration
First, on April 1, President Trump is set to receive the studies on America’s trading relationships that were commissioned shortly after Inauguration Day.
Second, on April 2, Trump is expected to lift the exemptions for Canada and Mexico on the 25% tariffs applied to imports that are USMCA-compliant (i.e., those that meet the agreement’s rules of origin).
Third, also on April 2, the administration is anticipated to announce the so-called “reciprocal tariffs.” According to publicly available information, these will apply universally, rather than being limited to an initial list of countries.
Yet, before we reach what the administration is calling “Liberation Day,” we turn your attention to the newly imposed “secondary tariffs” on purchases of Venezuelan oil. On March 24, 2025, President Trump issued a new Executive Order under the International Emergency Economic Powers Act (IEEPA), mandating 25% tariffs on countries importing oil of Venezuelan origin. Below is a high-level analysis of the measure:
- The Executive Order builds on the national emergency already in effect under the Venezuela Sanctions Program. Until now, the program had been administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
- The tariffs are justified on national security grounds, specifically citing the role of the gang Tren de Aragua—recently designated as a Foreign Terrorist Organization—which is said to be supported by the Maduro regime and to facilitate irregular migration into the U.S.
- The use of sanctions authority to impose tariffs is unprecedented and has not yet been challenged in court.
- Duties imposed under this Executive Order will be added to existing tariffs under other authorities, including IEEPA, Section 232, and Section 301. For instance, Chinese exports already subject to a 20% tariff could face cumulative tariffs of up to 45%, as China is specifically mentioned in the Executive Order as a potential target.
- The duties will be implemented by the U.S. Secretary of State, Marco Rubio, without involvement from the U.S. Trade Representative—marking a departure from traditional roles, as the Secretary of State has historically overseen sanctions, not tariffs.
- The measures will remain in effect for one year following the last purchase of Venezuelan oil.
- The definition of “Venezuelan oil” is broad, encompassing crude oil and petroleum products extracted, refined, or exported from Venezuela, regardless of the nationality of the producing or selling entity. The scope also extends to “indirect” transactions routed through intermediaries or third countries.
- The Executive Order takes effect on April 2, 2025. As of now, no provisions have been made for negotiations or general licenses for the winding down of existing operations.
- Notably, the order introduces the concept of “secondary tariffs” in contrast to “secondary sanctions.” While secondary sanctions target foreign parties with no direct connection to the U.S., secondary tariffs apply to all exports from targeted countries to the U.S.—regardless of the exporter’s identity or the product’s nature. The administration does not appear inclined to grant product-specific exclusions based on strategic importance or lack of U.S. substitutes.
It remains to be seen how markets will respond to what is shaping up to be a major shockwave in international trade. What is clear, however, is that Trump has far surpassed expectations in his first 100 days, ushering in an aggressive new era of tariff policy.
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