"Secondary Tariffs", Trump Throws Another Tariff Wild Punch

US President Trump has mentioned "secondary tariffs" several times in recent media interviews. Russian, Iranian and Venezuelan oil products are the explicitly targeted items. Since taking office, Trump has repeatedly used tariffs as a "weapon" of sanctions to coerce trade partners and disrupt the world trade order. What role will "secondary tariffs" play in this? What harm will they bring to the world economy?

"New Trade Weapon"

On March 24, Trump announced on social media that a 25% "secondary tariff" would be imposed on countries purchasing Venezuelan oil and gas to punish Venezuela for exporting illegal immigrants to the United States. The measure is scheduled to take effect on April 2. This "concept" unfamiliar even to the US financial community has immediately attracted media attention.

The US "Congressional Hill" daily interpreted that Trump's so-called "secondary tariff" is not a professional term. In essence, it is a form of currency sanction imposed on countries that have trade with countries "unfavorable" to the United States. By imposing "secondary tariffs", "not only Venezuela will be punished, but also its trade partners".

According to Trump, any country that buys oil or natural gas from Venezuela will be subject to a 25% tariff on "any trade" with the United States. Media interpretation says that this 25% is an additional tariff imposed on top of the heavy tariffs already levied by the United States on relevant countries.

In addition, due to "unsatisfactory" situations in issues such as the Russia-Ukraine ceasefire and the US-Iran negotiations, Trump has recently "complained" about Russia and Iran and threatened to impose "secondary tariffs" on all imported Russian oil and implement "secondary sanctions" on Iran.

Analysts from the "Trembling Quantitative Investment Data Platform" mentioned in a commentary that "secondary tariffs" are "Trump's new trade weapon". Trump put forward this "bold" move through an executive order, "combining elements of traditional tariffs and secondary sanctions", symbolizing a major upgrade in the US government's application of national economic means. If truly implemented, it may hinder global trade flows, reshape geopolitical relations, and echo Trump's claim that he would impose so-called "reciprocal tariffs" on all countries to balance the US trade deficit.

Venezuela Has Been Affected

Venezuela has been at odds with the United States for many years and has already endured severe economic sanctions from the United States. The Trump administration wants to further suppress Venezuela's oil export trade, its main source of revenue, in order to force the Venezuelan government to compromise.

Venezuelan Vice President Delcy Rodriguez confirmed on social media on March 30 that Venezuela has learned of the US decision to cancel the licenses of foreign companies to export Venezuelan oil products. "We are prepared for this and will continue to fulfill our contracts with these companies," she said. She stated that foreign companies doing business with Venezuela do not need licenses or authorizations issued by third-party governments.

According to Reuters, based on ship tracking data and information from sources, many companies have already suspended imports of Venezuelan oil under pressure.

Italy's energy giant Eni confirmed on March 30 that the US government has sent a letter informing that the company is not allowed to accept Venezuelan oil company's payment of its production contract payments with oil.

In addition to Eni, the US has also notified other foreign partners of Venezuelan Oil Company, including Spain's Repsol, France's Moller-Propp, India's Reliance Industries, etc. The US reminded these companies that the US government is about to cancel their export licenses for exporting Venezuelan oil and its by-products to the United States. The above "notifications" may be a precursor or groundwork for the US to implement the "secondary tariff" threat.

The Aggravated Turmoil Is Predictable

An analytical article from the "Trembling Quantitative Investment Data Platform" pointed out that from the "optimistic US perspective", the United States can use "secondary tariffs" to serve its geopolitical strategy, balance the trade deficit, and achieve foreign policy goals with its economic influence. If successfully implemented, it can increase the US bargaining chip in international trade agreement negotiations.

From a pessimistic perspective, once "secondary tariffs" are implemented, they may trigger countermeasures from affected countries, thereby exacerbating trade tensions and global market turmoil.

Many analysts are skeptical about the operability of such measures because international oil trade is complex and tracking the origin of the oil transportation chain is quite difficult.

Critics also believe that such measures will increase the costs of consumers and enterprises with a high degree of dependence on imported goods, thus damaging the US economy. In the long run, achieving geopolitical goals by imposing tariffs may not be as effective as diplomatic means.

Meanwhile, under the influence of the US's multiple tariff threats and capricious policies, market uncertainty has been increasing and the trading environment has become extremely complex. Trump's new "secondary tariff" move has further increased the concerns of investors and policymakers around the world about economic order disruptions.

[Disclaimer] The above article is reprinted from the Internet. The purpose of reprinting is to convey more information and does not represent that this website agrees with its views and is responsible for its authenticity; if the copyright owner or individual of the manuscript does not want it to be published on this website, please contact this website by phone or letter within two weeks.