Venezuela Situation Will Garner Lots of U.S. Lawmaker Focus

Venezuela Situation Will Garner Lots of U.S. Lawmaker Focus

Congress returns | Ag agenda | Jan. 30 deadline | Healthcare issues | Jobs report

LINKS

Link: Weekend Updates: Trump: U.S. Will Run Venezuela During Transition

Link: Video: Wiesemeyer’s Perspectives, Dec. 27; next update
Jan. 4
Link: Audio: Wiesemeyer’s Perspectives, Dec. 27; next update
Jan. 4

The Week Ahead: Jan. 4, 2026

UP FRONT

TOP STORIES
— Venezuela shock raises oil risk premium as tariffs stoke inflation fears
— Tariffs bite at home: Harvard–Chicago economists find U.S. import duties largely paid by Americans

CONGRESS
— Congress returns to Washington — Senate Monday, House Tuesday; Venezuela expected to dominate remarks
— 2025: Second fewest laws passed in over a century

KEY EVENTS
— Week of Jan. 5–9: Freedom 250 finale; Trump meets House Republicans; NIH global health forum; FARMCON; multiple energy, water, and oversight hearings; AFBF convention

ECONOMIC REPORTS
— Heavy data week ahead of Jan. 27–28 FOMC: ISM manufacturing/services, ADP, JOLTS, jobless claims, trade, and Jan. jobs report

AG REPORTS
— FAO food price index, Purdue ag sentiment, USDA export sales/inspections, CFTC Commitments of Traders, and livestock/grain updates

ENERGY REPORTS
— Venezuela in focus alongside EIA petroleum and natural gas data, API inventories, rig count, and ICE positioning reports

TOP STORIES—Venezuela shock raises oil risk premium as tariffs stoke inflation fearsEnergy jumps on supply uncertainty, gold catches a bid, commodities stay volatile, and the dollar weakens as geopolitics collide with tariff-driven cost pressure The escalation around Venezuela lands at a sensitive moment for global markets: energy supply risks are rising just as U.S. tariffs are feeding through to domestic prices and manufacturing costs (see next item). Together, those forces tilt the near-term balance toward higher inflation risk, stronger real-asset demand, and a softer dollar, even as growth concerns linger. Energy prices: upside risk returns•Oil: Any disruption to Venezuelan output or exports — through sanctions tightening, operational damage, or logistics — adds a geopolitical risk premium to crude. Heavy-sour barrels are harder to replace, which can steepen differentials and lift benchmarks.• Refined products: U.S. Gulf refiners that process heavy crude face margin volatility; gasoline and diesel prices can firm if feedstock costs rise.•Natural gas: Less direct impact, but higher oil prices often pull broader energy sentiment higher.
•Analysis: A multiyear recovery of Venezuelan oil production could entail a 4% decline in global oil prices over time, according to an analysis by Bloomberg Economics. That would help the US president address the affordability concerns voters have, but energy analysts added that it could take years for Venezuela’s oil industry — plagued by mismanagement, corruption and sanctions — to recover. “Both upside and downside scenarios have significant implications for Venezuela’s outlook, debt markets, global oil supply, and the US standing in the region and the world,” Bloomberg Economics analyst Jimena Zuniga wrote. Net effect: Bias up for oil prices and volatility. Venezuela’s Oil Shock Is More Political Than Market-MovingKey takeaways• Diminished global weight: Venezuela now produces roughly ~1 million bpd — about one-third of its 1990s peak and <1% of global output. Exports are estimated at 500,000–800,000 bpd, mostly bound for China via opaque shipping practices. Trump said the impact on U.S. relations with Russia, China and Iran — key Maduro allies — centers around oil. While Trump did not provide any details, the implication was that Trump could use U.S. sales of Venezuelan oil to undercut Iran and Russia’s oil exports.• Strikes avoided core assets: Recent U.S. airstrikes did not hit the country’s main oil terminal at Jose, the Amuay refinery, or the Orinoco Belt, where most production occurs.•Blockade effects were operational, not price-shifting: A U.S. push against sanctioned tankers diverted some vessels and disrupted naphtha imports — a critical diluent for Venezuela’s heavy crude — forcing temporary well shut-ins as storage filled. Global prices barely moved, cushioned by an ongoing supply surplus.• Market can absorb outages: With a hefty surplus expected to persist into early this year, the oil market has room to cope with further Venezuelan disruptions.• Recovery would be slow — and large: Meaningful output growth would require years and billions of dollars. If it materializes, added heavy barrels would benefit U.S. refiners that specialize in asphalt and other heavy-grade products.• Washington’s ownership signal: After the capture of Nicolas Maduro, President Donald Trump said a U.S. administration of Venezuela would deploy major American oil companies to rebuild infrastructure, framing the move as reclaiming expropriated U.S. investments.•U.S. company footprint: Chevron — operating under a Treasury license — accounts for ~25% of Venezuelan production through joint ventures with Petróleos de Venezuela SA and says it remains compliant and focused on safety.• China’s central role: Venezuela ships most crude to China — often to service oil-backed loans — through intermediaries and “ghost ships.” China’s CNPC is a JV partner with PDVSA; Beijing condemned the U.S. action and opposes sanctions targeting Chinese firms and vessels.•Other foreign players: Spain’s Repsol, Italy’s Eni, and France’s Maurel et Prom remain; TotalEnergies exited. Rosneft restructured holdings to sidestep sanctions. India’s Reliance Industries has stepped back due to sanctions risk.•Why the collapse happened: Since the early 2000s, tighter state control under Hugo Chávez gutted PDVSA’s technical ranks, deterred investment, and coincided with accidents and corruption. U.S. sanctions (2017 finance; 2019 oil) then accelerated decay, cutting access to U.S. technology. Despite the slump, ~95% of Venezuela’s foreign revenue still comes from oil.Bottom Line:Venezuela’s oil sector matters far more for geopolitics, sanctions enforcement, and future ownership than for near-term oil prices. Any meaningful supply comeback would be slow, but the strategic implications — especially vis-à-vis China and U.S. refiners — are immediate. Broad commodities: inflation hedge vs. growth drag• Industrial commodities (metals, ag inputs): Tariffs raise input costs (“production tariffs”), supporting prices even if volumes slow. Sectors like machinery and ag equipment feel it first. •Agriculture: Energy-linked inputs (fuel, fertilizer) nudge costs higher; trade frictions keep demand choppy. Net effect: Sticky-to-higher prices with uneven demand—more cost-push than demand-pull. Gold: tailwinds strengthen• Safe-haven demand rises on geopolitical escalation.• Inflation hedging intensifies as tariffs pass through to prices.• Dollar softness (see below) improves gold’s relative appeal. Net effect: Bullish bias for gold. The dollar: pressure builds•Classic theory says tariffs should strengthen the dollar — but 2025 showed the opposite. With growth uncertainty, expectations for easier Fed policy, and capital-flow caution, geopolitics amplifies downside risks. Net effect: Weaker dollar, especially versus currencies tied to commodities and safe havens. Bottom Line:A Venezuela flare-up raises energy prices and volatility, supports gold, and adds to tariff-driven inflation pressure already hitting U.S. manufacturers. With growth risks in the background, markets are likely to favor real assets over the dollar in the near term — even if risk sentiment remains choppy.—Tariffs bite at home: Harvard–Chicago economists find U.S. import duties largely paid by AmericansA new analysis by Gita Gopinath of Harvard University and Brent Neiman of the University of Chicago finds near-total tariff pass-through to U.S. prices, higher manufacturing costs, and sharp shifts in global supply chains A new paper (link) by Gita Gopinath (Harvard University) and Brent Neiman (University of Chicago Booth School of Business) examines the real-world impact of the Trump administration’s 2025 tariff surge and concludes that, even though actual tariffs are lower than headline rates, the economic burden is falling overwhelmingly on the United States. The authors show that statutory tariff rates climbed to levels not seen in more than a century — peaking above 30% in 2025 — but actual, collected tariff rates averaged closer to 14% due to shipping lags, exemptions, USMCA compliance, and uneven enforcement. This persistent “statutory-actual gap” has softened the immediate shock relative to policy announcements but has not eliminated the economic impact. Crucially, Gopinath and Neiman find that tariff pass-through to U.S. import prices is extremely high. Using Bureau of Labor Statistics import price indices and Census trade data, they estimate that roughly 90–95% of tariffs imposed in 2025 were passed directly into prices paid by U.S. importers — similar to, or higher than, pass-through observed during the 2018–2019 trade war. Exporters generally did not cut prices to absorb the tariffs; U.S. buyers bore the cost instead. These higher prices have driven major shifts in sourcing. China’s share of U.S. goods imports has fallen from more than 20% before the first trade war to roughly 8% by late 2025, while countries such as Vietnam and India gained share as alternative suppliers. The authors caution, however, that some of this growth may reflect Chinese value added being rerouted through third countries rather than true diversification. Because most U.S. imports are intermediate inputs rather than finished goods, the tariffs are also raising domestic production costs. The paper introduces the concept of “production tariffs” and finds especially large cost increases in manufacturing sectors such as heavy-duty trucks, motor vehicles, agricultural implements, and industrial machinery. For U.S. manufacturing overall, production costs rose by more than one percentage point in 2025, with evidence that these higher costs are feeding into producer prices. Finally, the Harvard–Chicago analysis highlights a puzzle: unlike in 2018–2019, the U.S. dollar depreciated in 2025 even as tariffs surged, contradicting standard trade theory. The authors suggest broader macro forces — heightened uncertainty, growth concerns, faster expected Fed rate cuts, and shifting global capital flows — overwhelmed the textbook tariff-currency relationship. Bottom Line: Even with exemptions and delays, today’s tariffs are reshaping trade flows, raising costs for U.S. manufacturers, and pushing prices higher at home — confirming that the economic incidence of tariffs remains largely domestic, not foreign.

—CONGRESS

—Congress returns to Washington — Senate Monday, House Tuesday

Key debates to unfold, Venezuela expected to dominate lawmakers’ remarks

U.S. lawmakers return this week — with the Senate returning on Monday and the House on Tuesday. Lawmakers are preparing for a packed agenda shaped by high-stakes domestic policy battles and an extraordinary foreign policy flashpoint. This session marks the first regular workweek of 2026 and comes amid intense political and geopolitical developments.

Domestic policy priorities on the table. When members of Congress return, several major issues will be at the top of the legislative calendar:

•Healthcare and budget challenges: Congress will confront the so-called “ObamaCare cliff,” referring to the looming expiration of Affordable Care Act premium tax credits and other health subsidies that millions of Americans rely on. Lawmakers are under pressure to act quickly to temper insurance market disruption and rising costs.

•Fiscal and appropriations work: With ongoing budget negotiations and the need to finalize appropriations to avert government funding gaps, congressional leaders are expected to press forward on spending negotiations and potential short-term funding measures. Their latest deadline is Jan. 30.

• Economic and regulatory agenda: Beyond healthcare and budgets, members on both sides of the aisle are poised to debate tax policy, labor concerns, and regulatory priorities intersecting with the new administration’s economic strategy.

•Ag agenda: Some farm-state lawmakers say they will push another farmer economic aid package as the Farmer Bridge Assistance program is seen as insufficient to help farmers enough before planting time. Meanwhile, the latest efforts to work on a “skinny” farm bill (ala Farm Bill 2.0) now has the timeline moving to February with a hoped-for House vote that month.

— Venezuela situation emerges as a flashpoint for lawmakers. One of the most consequential issues lawmakers will address on the floor and in committee this week is the U.S. military action and fallout in Venezuela.

Over the weekend, the United States conducted military strikes in Venezuela, resulting in the removal and capture of Venezuelan President Nicolás Maduro and his wife, who were transported to the U.S. to face criminal charges. President Donald Trump announced that the U.S. would temporarily “run” Venezuela and oversee its transition while leveraging its oil resources — a move that immediately ignited domestic and international controversy.

Lawmakers’ reactions are sharply divided:

Republican members in Congress generally praised the operation as a strong stand against criminal networks and a blow to authoritarianism. Senate Majority Leader John Thune and other GOP leaders have indicated they expect classified and public briefings on the operation this week and reiterated support for confronting drug trafficking tied to the Venezuelan regime.

Democratic lawmakers have expressed outrage over the lack of congressional consultation and legal authorization, claiming they were misled by the administration about its intentions and demanding a clear plan and transparency on the situation in Venezuela. Senate Majority Leader Chuck Schumer (D-N.Y.) and other Democrats are pressing for briefings and have signaled they may push legislative measures to curb further unilateral military action without Congress’s consent.

Expected actions in Congress this week include:

• Senate consideration of a War Powers resolution or similar measure that would require congressional authorization for further military engagement in or against Venezuela.

• Public statements, debates, and possible hearings on constitutional war powers, oversight of executive military decisions, and the strategic goals of U.S. involvement in Venezuela.

The urgency reflects not only domestic political dynamics but also global reactions; the United Nations Security Council is scheduled to meet Monday to address the U.S. role in Venezuela, where the intervention has been described as setting a “dangerous precedent.”

Lawmakers set to make their voices heard. Debate in both chambers is expected to be intense and cross-cutting, with members addressing:

• Constitutional war powers and executive authority

• Implications for U.S. military engagement abroad

• Economic and humanitarian impacts in the Western Hemisphere

• U.S. leadership and precedent in international law

Given the dramatic events over the weekend and the international outcry, Venezuela is likely to be the single most discussed foreign policy issue on Capitol Hill this week — shaping speeches, votes, and legislative strategy as Congress returns to work.

—2025: Second fewest laws passed in over a century

—KEY EVENTS

Mon., Jan. 5
• Freedom 250 event. Final night of the Freedom 250 event hosing the Washington Monument Lighting & New Year’s Eve Show.

Tue., Jan. 6

•President Trump will meet with House Republicans, Punchbowl News reports, citing a person familiar with the plans. The meeting will be at the Kennedy Center.
•Global health threats. The National Institutes of Health (NIH) holds a virtual discussion on “Demystifying Medicine – Pandemics on the Horizon: Are We Ready for the Next Global Threat?”
• National Potato Council Potato Expo 2026, through Thursday, Dallas.

Wed., Jan. 7

•Minnesota food aid fraud. House Oversight and Government Reform Committee hearing on “Oversight of Fraud and Misuse of Federal Funds in Minnesota: Part I.”
• FARMCON, Conference for Creative Minds in Agriculture, through Thursday, Kansas City, Missouri.

• Humanitarian assistance outlook. The Atlantic Council’s Freedom and Prosperity Center holds a discussion on “The future of humanitarian assistance.”
• Energy dominance. House Energy and Commerce Energy Subcommittee hearing on “American Energy Dominance: Dawn of the New Nuclear Era.”

Thur., Jan. 8

• Forest and water issues. House Natural Resources Water, Wildlife and Fisheries Subcommittee hearing on “Fix Our Forests for Affordable and Reliable Water and Power Supplies.”
• Energy trends. Center for Strategic and International Studies (CSIS) discussion on “Energy Trends Across APEC: Insights from Asia Pacific Energy Research Center (APERC’s) 9th Energy Outlook.”

Fri., Jan. 9
• Jan. 6 recap. Politics and Prose Bookstore book discussion on “Storm at the Capitol: An Oral History of January 6th.”
• American Farm Bureau Federation annual convention, through July 12, Anaheim, California.

—ECONOMIC REPORTS

—The next FOMC policy meeting is Jan. 27–28, 2026 (policy decision and press conference on Jan. 28). Markets currently see relatively low odds of a rate cut at that meeting due to lingering inflation and firm labor markets, though expectations can shift based on this early January data flow.

Mon., Jan. 5

• ISM Manufacturing Index (Dec): A key gauge of manufacturing sector activity; markets watch for signs of expansion vs. contraction. Consensus: Typically, economists expect a reading near the 49–51 range (slightly around flat/expansion).

•Motor Vehicle Sales

Market implications: Manufacturing data is often a leading indicator for GDP and Fed inflation outlook.

Tue., Jan. 6

• S&P Global Final Services PMI (Dec): Final services sector PMI reading (timed typically early morning). Consensus: Markets expect modest expansion consistent with prior months.

• Tom Barkin (Richmond Fed President) speaks: Public remarks by a regional Fed president can influence markets if policy views are expressed.

Market Implications: Services PMI has dominated U.S. economic activity; stronger readings tend to bolster confidence in consumer-driven growth.

Wed., Jan. 7

•ADP Employment Report (Dec): Private-sector payrolls estimate (8:30 am ET). Consensus: Analysts generally expect private jobs growth to be positive but modest, following a trend of slowing employment gains (e.g., recent estimates centered around ~50k–100k gains) based on leading forecasts.

• ISM Services Index (Dec): Broad measure of services activity (10:00 am ET). Consensus: Economists typically forecast readings slightly above 50, signaling expansion.

• JOLTS Job Openings: Job openings gauge labor market slack; consensus usually points to a modest decline vs prior month.

• Factory Orders: Broad measure of durable and nondurable goods orders.

•Michelle Bowman (Fed Governor) speaks: Commentary from a Board governor can offer insights on inflation and labor market conditions.

Market implications: A soft ADP print combined with lower job openings could reinforce easing expectations, while strong services data can signal resilience.

Thur., Jan. 8

• Jobless Claims: A key high-frequency gauge of labor market health; consensus: Claims are expected to remain near multi-year lows, consistent with a still-tight labor market reported by markets.

• International Trade: Goods and services trade deficit; consensus: A moderate deficit is expected.

• Productivity and Costs: Updated reading on labor productivity and unit labor costs.
• Wholesale Trade
•Consumer Credit

•Market implications: Continued low claims support a sticky labor market narrative, which could influence rate expectations ahead of the next FOMC meeting.

Fri., Jan. 9

•U.S. Nonfarm Payrolls & Unemployment: The marquee labor market release (8:30 am ET). Consensus forecast: Economists expect a slowdown in job gains — roughly ~55,000 new jobs added — with the unemployment rate dipping slightly to ~4.5%. The jobs report will be the week’s most market-moving indicator and a key input into the Fed’s policy outlook ahead of the Jan. 27-28 FOMC meeting.
• Housing Starts: Residential construction activity; consensus: Mixed but generally steady.

•Consumer Sentiment: Consumer confidence index; consensus: Expect a modest uptick as inflation expectations stabilize.

• Federal Reserve. Minneapolis Fed President Neel Kashkari scheduled to speak.

Market implications: A weaker-than-expected payrolls print could tilt markets toward pricing modest rate cuts later in 1H 2026, while stronger employment would reinforce a more neutral stance.

—AG REPORTS

—Ag focus: The United Nations’ FAO monthly food price index is scheduled to be released Friday. Focus during the week will also be on Purdue’s barometer for the U.S. farm economy, released Tuesday, and USDA catching up on Export Sales information, and CFTC via the Commitments of Traders report.

Mon., Jan. 5

• Malaysia’s Jan. 1-5 palm oil exports
• CFTC Commitments of Traders

• Export Inspections
• Export Sales

Tue., Jan. 6

• EU weekly grain, oilseed import and export data
• Purdue Agriculture Sentiment
• Dairy Products
• Cotton and Wool Yearbook

Wed., Jan. 7

• Export Sales
• Broiler Hatchery
• State Stories

Thur., Jan. 8

• Export Sales
• Slaughter Weekly

Fri., Jan. 9

• FAO World Food Price Index
• CFTC Commitments of Traders
• Livestock and Meat International Trade Data
• Peanut Prices

—ENERGY REPORTS

—Energy focus: As noted in Top Stories section, the Venezuela situation will garner key market attention, and it will be a topic for returning U.S. lawmakers.

Mon., Jan. 5

• ICE weekly Commitments of Tradersreport for Brent, gasoil
• Holiday: Russia

Tue., Jan. 6

• API US inventory report
• Holiday: Russia, Iraq, Greece

Wed., Jan. 7

• EIA Petroleum Status Report
• Weekly Ethanol Production
• Goldman Sachs Energy, CleanTech & Utilities Conference
• Holiday: Russia, Kazakhstan, Egypt

Thur., Jan. 8

• EIA Natural Gas Report
• BTC loading program (February)
• Holiday: Russia

Fri., Jan. 9

• ICE weekly Commitments of Tradersreport for Brent, gasoil
• Baker-Hughes Rig Count
• Holiday: Russia

REFERENCE LINKS TO KEY TOPICS

2025 review | 2026 issues | Policy timelines |