SINCE US President Trump announced a 25 per cent import tariff on countries buying oil and gas from Venezuela on March 24, the big question in TT is, what does this mean for this country’s exports?
While one chamber said the tariffs could have a deleterious effect on TT’s export manufacturing industry, one expert has said the tariffs, like those against countries such as Mexico and Canada, would likely do the US economy more harm than it would to TT's economy.
Trump, through a post on his Truth Social platform, announced a “secondary tariff” on Venezuela saying it was in response to Venezuela “purposely and deceitfully” sending tens of thousands of criminals to the United States.
The post added that Venezuela was very hostile to the US and its freedoms.
“Therefore any country that purchases oil and/or gas from Venezuela will be forced to pay a tariff of 25 per cent to the US on any trade they do with our country,” Trump said in his Truth Social post. He said the tariff will take effect on April 2.
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A general licence was awarded to oil and gas giant Chevron by the US department of the Treasury, authorising the wind down of certain transactions related to Chevron’s joint ventures in Venezuela.
The licence allows for the winding-down of transactions related to the operation and management of Cheveron's joint ventures with Petroleos de Venezuela, SA (PDVSA) or any entity which PDVSA owns.
The order said it does not authorise the payment of taxes or royalties to Venezuela, payment of dividends to PDVSA or the sale of petroleum products produced through Chevron’s joint ventures with PDVSA for export to the US.
TARIFFS CAN HURT TT AND US
Economist and principal consultant at VSL Consultants Ltd, Gregory Mc Guire, said the tariffs could hurt TT. But he said it would depend on what TT exports to the US.
“It obviously might dampen the demand for goods (coming from TT), but that is if, in fact they could get it elsewhere.
If the US importers can get the goods cheaper elsewhere then it could hurt TT and other countries so affected. If they can’t and they continue to source it from TT, then it is simply going to hurt them.”
President of the Confederation of Regional Business Chambers Vivek Charran said the tariffs could not only mean that the export manufacturing sector in TT could take a serious hit, but it also puts a strain on TT-US trade relationships, especially at a time where TT is facing challenges with foreign exchange (Forex).
“You would expect that it would affect the manufacturing sector really badly,” Charran said.
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“It is going to jeopardise or make it difficult to have the US as a trade partner,” he said. Seeing that we really want the US dollars and considering that America is a very large market, it is going to affect the outlook for many of the successful manufacturing exporters who already have a foot in the door.
WHAT ARE TARIFFS?
Tariffs are taxes charged on goods imported from other countries.
For example, if TT had a 20 per cent tariff on a particular US-made item costing US$10, when it is imported it will have an additional US$2 charge.
Businesses that import these items can decide whether to absorb the cost or pass some or all on to customers.
The US International Trade Administration in TT says customs duty is imposed on products coming into TT based on the fair market value of imported goods at the time it lands in the country.
Import prices for products are generally based on cost, insurance, freight and duty along with VAT, which is reduced to zero per cent for certain goods.
TT has also implemented Caricom’s common external tariff (CET) for goods from countries outside Caricom, with import tariffs going as high as 30 per cent for auto parts, DVD players and jewellery, and 20 per cent for other products.
TT’s tariff system fits in seamlessly with its foreign trade policy which also has bilateral investment agreements with the US, Canada, China, several countries in the EU, the UK and Mexico.
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TT also has a preferential tariff arrangement with the US under the Caribbean Basin Economic Recovery Act, implemented in 1984 to allow products from beneficiary countries such as TT to export to the US without having to pay any duties.
TT, being in the middle of US/Venezuelan geopolitical issues, share close trade relationships with both countries.
The US State Department said in 2023, the US was TT’s largest trading partner, exporting US$5.4 billion to TT and importing US$3.5 billion in TT goods.
With regard to Venezuela, energy is one of the areas in which TT and Venezuela collaborate the most.
In 2024, Minister of Energy and Stuart Young announced that the US Government had awarded TT a licence to explore for natural gas in the Manakin-Cocuina Field, the second largest of the fields that straddle the TT/Venezuela maritime border.
Manakin-Cocuina has a capacity of at least one trillion cubic feet (tcf) of proven gas reserves.
The Loran/Manatee field has a total of seven tcf, with a capacity of 2.7 tcf on TT’s side of the field. The Kapoc/Dorado field has a capacity of 0.31 tcf.
TT was also granted a 30-year licence to explore, produce and export gas from the Venezuelan Dragon Field to TT.
