Trump Threatens 5% Tariff Hike on Mexico & U.S. Seizes Tanker Off Venezuelan Coast (w/ Video)

Trump Threatens 5% Tariff Hike on Mexico Over It Failing to Deliver on Water Treaty Promises

On Monday, President Trump threatened a 5% tariff on Mexico if it doesn’t comply with the U.S.-Mexico Water Treaty of 1944, for which Mexico has fallen behind on its obligations. The president warns Mexico must release 200,000 of the 800,000 acre-feet of water it owes by December 31st to avoid an immediate tariff increase.

President Trump made the announcement through a Truth Social post:

Mexico continues to violate our comprehensive Water Treaty, and this violation is seriously hurting our BEAUTIFUL TEXAS CROPS AND LIVESTOCK. Mexico still owes the U.S over 800,000 acre-feet of water for failing to comply with our Treaty over the past five years. The U.S needs Mexico to release 200,000 acre-feet of water before December 31st, and the rest must come soon after. As of now, Mexico is not responding, and it is very unfair to our U.S. Farmers who deserve this much needed water. That is why I have authorized documentation to impose a 5% Tariff on Mexico if this water isn’t released, IMMEDIATELY. The longer Mexico takes to release the water, the more our Farmers are hurt. Mexico has an obligation to FIX THIS NOW. Thank you for your attention to this matter!

This illustrates one more way the Trump Administration utilizes tariffs and tariff threats in foreign relations. President Trump uses tariffs to negotiate trade deals, create leverage for peace deals, and – as seen here – to enforce fulfillment of deals already in place.

Again, the tariff threat appears effective. In his post on Monday, President Trump said Mexico was not responding about its failure to release the water it owes. By Tuesday, Mexican President Claudia Sheinbaum was reportedly striking a conciliatory tone.

Yesterday, the Wall Street Journal (WSJ) reported Mexico is seeking a water deal after President Trump’s tariff threat.

A deal may be necessary because Mexico does not appear able to deliver the water in time.

U.S. Seizes Tanker for Illegal Oil Shipping

U.S. Attorney General Pamela Bondi announced in an X post yesterday that the U.S. seized an oil tanker off the coast of Venezuela:

Today, the Federal Bureau of Investigation, Homeland Security Investigations, and the United States Coast Guard, with support from the Department of War, executed a seizure warrant for a crude oil tanker used to transport sanctioned oil from Venezuela and Iran. For multiple years, the oil tanker has been sanctioned by the United States due to its involvement in an illicit oil shipping network supporting foreign terrorist organizations. This seizure, completed off the coast of Venezuela, was conducted safely and securely—and our investigation alongside the Department of Homeland Security to prevent the transport of sanctioned oil continues.

The tanker’s name is the Skipper. Kayla Epstein and Ione Wells wrote in a BBC article about its seizure:

The US treasury department sanctioned the Skipper in 2022, CBS reported, for alleged involvement in oil smuggling that generated revenue for Hezbollah and the Islamic Revolutionary Guard Corps-Quds Force.

BBC Verify also located this tanker on MarineTraffic, which shows it was sailing under the flag of Guyana when its position was last updated two days ago.

A statement from Guyana’s Maritime Administration Department on Wednesday evening, however, said that the Skipper was “falsely flying the Guyana Flag as it is not registered in Guyana.”

The Skipper’s port of call log shows it called in Iran, Iraq, and the UAE from 30 June to 9 July this year. Its most recent stop, according to MarineTraffic, was at Soroosh port in Iran on 9 July.

That does not mean that it has not called at multiple other ports since then.

MarineTraffic shows it was last near Iran in mid-September before arriving off the coast of Guyana at the end of October and making minimal further movement since then. This data may be partial or incorrect because of spoofing [broadcasting a false location].

According to an article published today by Reuters, the U.S. is preparing to seize more tankers off the coast of Venezuela:

The latest U.S. action has put shipowners, operators and maritime agencies involved in transporting Venezuelan crude on alert, with many reconsidering whether to sail from Venezuelan waters in the coming days as planned, shipping sources said.

Further direct interventions by the U.S. are expected in the coming weeks targeting ships carrying Venezuelan oil that may also have transported oil from other countries targeted by U.S. sanctions, such as Iran, according to the sources familiar with the matter who declined to be named due to the sensitivity of the issue.

Here’s the video the U.S. released of the Skipper’s seizure:

For container shipping, the biggest impact the seizure of oil tankers may have is oil bunker prices are impacted, affecting what importers and exporters pay on shipments. Time will tell if the U.S. cracking down on illegal shipping of sanctioned oil significantly impacts oil markets.