Colombia Tariff Threat Highlights Oil Price Sensitivity

President Trump on Sunday threatened to impose 25% tariffs on all imports from Colombia in a move that would have made crude oil from that country more expensive, driving fuel prices up.

The Colombian government, however, almost immediately agreed to accept illegal migrants being returned to the country, proving the threat’s effectiveness.

Trump issued the threat on Sunday after the Colombian government refused to accept a military plane returning illegal Colombian migrants, objecting, apparently, to the use of this sort of aircraft for the deportations.

Trump took to social media to issue his threat, saying the United States would immediately slap 25% tariffs on all Colombian exports to the U.S., and raise that to 50% a week later. The retaliatory measures also included visa cancelations for Colombian officials working in the U.S.

Colombia’s biggest export commodity for the United States is crude oil, of which Colombia is exporting billions worth to the U.S. while importing a lot of refined products from there. The danger of higher fuel prices, however, was quickly averted.

“The Government of Colombia has agreed to all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay,” White House press secretary Karoline Leavitt said in a statement late on Sunday.

Colombia’s foreign minister, meanwhile, said that the country “will continue to receive Colombians deported, guaranteeing them dignified conditions as citizens subject to rights.”

“The government, under the leadership of Gustavo Petro, has at its disposal the presidential plane to receive the Colombians that would have been deported today,” Luis Gilberto Murillo also said. “Colombia reiterates that the diplomatic channels for interlocution will be open to maintain the rights, the national interest and the dignity of our citizens.”

By Irina Slav for Oilprice.com

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