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Trump’s Tariff on Venezuela’s Oil Trade: A Risky Gamble for Global Business

In a bold escalation of U.S. foreign policy, President Trump has announced a 25% tariff on any country that buys oil and gas from Venezuela, an unprecedented move that could alter the contours of global trade and energy markets. This decision, ostensibly aimed at cutting off financial support to the Venezuelan government, is emblematic of the administration’s increasing reliance on tariffs and trade policy to achieve geopolitical goals. This is also as curious as the US is the second largest consumer of Venezuelan oil and gas.

However, this policy strategy risks straining U.S. economic interests at home, further exposing a growing divide between the White House’s foreign policy and public sentiment. A recent Gallup poll showed that Americans’ confidence in the economy has hit a four-year low, largely due to concerns over the costs imposed by Trump’s tariffs. Ipsos data reveals clearly that 61% of Americans want the administration to prioritize inflation and rising prices—issues increasingly linked to the very tariffs it continues to implement.

Rising Trade Barriers and a Fragmented Global Economy

The U.S. tariff on countries trading with Venezuela is just one example in a broader trend of escalating trade barriers. According to The Wall Street Journal, nations are imposing trade restrictions at the fastest rate since the 1930s, when a flood of U.S. tariffs triggered a wave of global protectionism. While countries had already begun increasing trade barriers in response to the oversupply of Chinese goods, the return of aggressive U.S. tariffs, under President Trump’s “economic statecraft” approach, has sharply accelerated the trade conflict.

This tactic, which includes the use of “secondary tariffs” (penalties imposed on countries that do business with target nations), has intensified the global trade war. Although economists do not forecast another Great Depression—citing that average tariffs remain well below the 20th-century highs—they warn of significant and lasting damage. Both economic and diplomatic ties could be permanently altered, creating an environment where trade and cooperation are increasingly dictated by geopolitical objectives rather than mutual benefit.

Countries around the world are already bracing for the retaliatory tariffs Trump is expected to impose on April 2. For instance, India is weighing cutting duties on over half of U.S. imports to mitigate the impact. Such developments highlight the growing fragility of international trade as nations adjust to the unpredictable consequences of U.S. policy.

The Impact on Global Trade

The immediate effects of these tariffs will be felt across global supply chains. Countries trading with Venezuela now face a difficult decision: comply with U.S. sanctions and risk crippling their energy supply or absorb the 25% tariff to continue doing business with Venezuela. This will force many nations to reassess their energy strategies and economic alliances, with repercussions extending beyond the energy sector.

For global businesses, the implications are stark: as tariffs, sanctions, and trade barriers proliferate, companies are being forced to adapt to a more fragmented global market. The uncertainty surrounding these trade policies could increase the cost of doing business, disrupt long-established supply chains, and raise the stakes of international negotiations.

Protectionism and Its Discontents

At the heart of this policy lies a growing reliance on protectionism. While the U.S. government views tariffs as a tool for both economic defense and foreign-policy leverage, the broader consequences are more complicated. Trade wars tend to lead to retaliatory tariffs, raising prices for consumers and forcing businesses to adjust. While the long-term effects remain uncertain, the immediate impact is clear: businesses are navigating a more fragmented, unstable global market.

Public opinion in the U.S. reflects growing skepticism toward the efficacy of tariffs. According to Reuters/Ipsos, only 31% of Americans believe that tariffs benefit American workers, while 48% disagree. The administration’s trade policies, particularly in the context of rising costs, seem at odds with the public’s priorities. A majority of Americans—61%, according to Ipsos—want the administration to focus on inflation and rising prices rather than pursuing an aggressive foreign-policy agenda through tariffs.

A Nation Divided on Foreign Policy

The imposition of tariffs on countries trading with Venezuela further exposes the divide within the U.S. regarding its role on the world stage. While some Americans support the president’s confrontational stance on foreign adversaries, a significant portion of the population is increasingly concerned about the domestic economic consequences of this approach. The disconnect between the administration’s foreign-policy goals and the economic concerns of U.S. citizens highlights the tension between protecting national interests abroad and addressing the needs of the American public at home.

The Path Forward

In the years ahead, businesses will need to be increasingly nimble, navigating a global trade environment shaped by rising tariffs, sanctions, and economic nationalism. As countries deploy tariffs to enforce political objectives, companies must adapt to an unpredictable landscape where the lines between foreign policy and trade policy are increasingly blurred.

For policymakers, the challenge will be balancing the geopolitical ambitions of the administration with the economic priorities of its citizens. The risks of escalation are clear—what remains to be seen is how businesses and governments will respond to the growing uncertainty. As history has shown, the unintended consequences of protectionism can be profound, and the stakes for global business have never been higher.

What Businesses Can Do About It

As tariffs and trade barriers continue to reshape the global economic landscape, businesses must be proactive in protecting their interests. While it’s unclear how these policies will evolve given their erratic nature, there are several actions that companies can take to mitigate the impact and influence policy decisions moving forward.

1) Advocate at the State and Federal Level

Businesses must engage directly with policymakers at both the state and federal levels. This involves not only voicing concerns to elected officials but also working closely with industry groups, trade associations, and chambers of commerce to advocate for policies that support free trade and open markets. By engaging with lawmakers, businesses can help ensure that their concerns are heard, particularly regarding tariffs’ effects on supply chains, production costs, and consumer prices. Lobbying efforts can be particularly effective when they highlight the broader economic consequences—such as job losses, reduced competitiveness, and higher prices—that could result from protectionist policies.

One thing I recommend to CEOs is how important the investment of time into relationships really is. Those relationships with elected officials, their staff, and senior level government officials can be powerful and create advocates ‘inside’ the circle.

2) Create an Advocacy Plan with a Strong Business Case

To have a meaningful impact on policy decisions, businesses need to develop an advocacy plan that clearly outlines the economic and strategic consequences of tariffs. This plan should include a comprehensive business case that demonstrates the direct impact of tariffs on domestic productivity, consumer prices, and the long-term competitiveness of industries. By compiling data, case studies, and industry-specific analyses, businesses can present a compelling argument for why tariff escalation is harmful to the domestic economy. This could involve demonstrating how tariffs disrupt supply chains, reduce access to key materials, and increase operational costs, ultimately leading to reduced investment and slower economic growth.

Think – compelling data, consistency and united front with allies. Those could be other businesses, could be customers. Could be anyone who is willing to stand up and tell your story.

3) Media Relations

For American businesses, being vocal against a volatile president is a risk. However, a proactive media relations are another critical strategy for businesses. In an era of rapid information flow, controlling the narrative is essential. Businesses can work with the media to raise awareness of the negative impacts of tariffs on their operations, employees, and the broader economy. Writing op-eds, issuing press releases, and engaging with journalists who cover trade and economics can help shape public discourse and bring attention to the consequences of the administration’s policies. By highlighting personal stories, such as those of employees affected by tariff-induced price hikes or businesses struggling with disrupted supply chains, companies can humanize the economic data and make their case more relatable to the public.

4) Diversify Supply Chains and Business Strategy

While advocating for policy change is essential, businesses must also take practical steps to insulate themselves from the immediate effects of tariffs. One key strategy is to diversify supply chains. This means exploring new sources for materials, components, and finished goods in countries with fewer trade restrictions. Additionally, companies should consider reshoring or nearshoring some of their production to reduce reliance on foreign imports and mitigate the impact of future tariffs. Companies can also assess how tariffs might affect their long-term strategic goals and adjust accordingly—whether that means investing in automation, finding alternative markets, or shifting product lines to areas less susceptible to trade disruptions. In essence, it must be a multi-pronged strategy.

5) Engage in Strategic Alliances and Trade Agreements

In this shifting landscape, businesses should explore opportunities for strategic alliances with international partners or engage in trade agreements that may provide some insulation from rising tariffs. By collaborating with other businesses, governments, and international organizations, companies can help shape a collective response to trade barriers. These alliances can also lead to new markets, investment opportunities, and more resilient supply chains.

6) Monitor Policy Developments Closely

Given the rapidly changing nature of tariffs and trade policies, businesses must stay informed and agile. Monitoring policy developments, both in the U.S. and internationally, is essential to anticipating changes that could impact operations. Businesses should subscribe to trade newsletters, consult with trade experts, and attend industry briefings to stay ahead of new tariffs, sanctions, and trade negotiations. By staying informed, businesses can respond more quickly and effectively to changing circumstances, allowing them to adjust their strategies proactively rather than reactively. The value in public affairs as a profession is gaining and gathering the political intelligence necessary to build a ‘model’ of decision making to allow for some predictability (or as best as can be expected). Again, these relationships matter.

7) Consider Long-Term Risk Management Strategies

In addition to short-term adjustments, businesses should also consider developing long-term risk management strategies to hedge against the volatility introduced by tariffs and other trade barriers. This might involve rethinking global expansion plans, adjusting investment strategies, or even considering alternatives to key materials that may be subject to tariffs. By assessing risks more broadly and preparing for a variety of scenarios, businesses can ensure that they are better equipped to navigate whatever challenges lie ahead.