Since the beginning of this year, relations between the U.S. and Cuba have rapidly deteriorated, raising concerns of potential conflict in the Americas. After the U.S. removal of Venezuelan president Nicolás Maduro from power in January, speculation arose about whether the U.S. would take similar actions against Cuba’s government, with U.S. President Donald Trump publicly floating the idea of a U.S. intervention on several occasions.
Throughout May, the U.S. significantly expanded sanctions on businesses and individuals interacting with Cuba. Additionally, on May 20, the U.S. indicted former Cuban President and major political figure Raúl Castro of shooting down two civilian planes carrying U.S. citizens in 1996. This move has renewed concerns of a potential U.S. intervention, since the U.S. first indicted Venezuela’s president Maduro before removing him from the country in a military raid.
These actions have resulted in significant pushback from Cuba’s government, which has since promised to retaliate against any U.S. violations of its sovereignty and allegedly recently obtained over 300 military drones from Russia and Iran for this purpose. Although U.S.-Cuba talks have been ongoing for months, and U.S. Central Intelligence Agency director John Ratcliffe recently visited the island, no agreement appears imminent. Cuban officials have indicated willingness to negotiate with the U.S. and potentially make changes to the country’s economy and governance as concessions but criticized the U.S. as negotiating in bad faith and creating a pretext for an invasion. U.S. Secretary of State Marco Rubio further confirmed on May 21 that he does not view a deal as likely, although Cuba did accept a shipment of $100 million (€86.1 million) of U.S. humanitarian aid.
U.S. expands sanctions on all foreign companies interacting with Cuba’s economy
On May 1, President Trump signed an executive order that significantly expanded existing U.S. sanctions on trade with Cuba to include any foreign person operating in the energy, defense and related materials, metals and mining, financial services, and security sectors of Cuba’s economy, or in any other sector of the economy. Under the new sanctions, the U.S. could target nearly any non-U.S. citizen or company conducting business activities on the island. This significantly expands on previous U.S. sanctions that focused on restricting engagement between U.S. nationals and Cuban entities, although many international companies and financial institutions had already limited dealings with the country as a precaution.
In response to the tightening sanctions environment, CMA CGM and Hapag-Lloyd have suspended all cargo bookings to Cuba until further notice. The suspensions could affect as much as 60% of Cuba’s shipping traffic by volume, with trade flows from China expected to face especially severe disruption. Shipping routes from Northern Europe and the Mediterranean are also likely to be affected. Industry sources indicate the shipping companies could either permanently cease services to Cuba or attempt to negotiate an arrangement with the Trump administration that would allow operations to continue.
Further recent sanctions also specifically targeted Grupo de Administración Empresarial S.A. (GAESA), a Cuban state-owned conglomerate. Although the company does not publicly disclose its business activities, it reportedly controls many of Cuba’s most profitable sectors, including international commerce, foreign currency exchange, real estate, banking, and tourism, accounting for an estimated 40% to 70% of Cuba’s gross domestic product. While the lack of information on the company makes it difficult to confirm the industrial impacts of the sanctions, most international firms operating in Cuba are believed to have some level of interaction with GAESA due to its extensive role in the Cuban economy. Additionally, the U.S. Department of State has warned that more sanctions could be introduced on companies involved in Cuba soon.
Additionally, the U.S. directly sanctioned the operators of the Moa nickel and cobalt mine in Moa, Cuba, including Canada-based Sherritt International. Operations at the mine had already been halted for several months due to fuel disruptions. Following the announcement of sanctions, Sherritt International announced plans to divest from the venture while maintaining operational continuity. While Cuba is not a major supplier to global metal markets, the targeting of the Canadian company Sherritt International indicates that any foreign companies having industrial dealings with Cuba could be at risk of future sanctions.
Cuba experiences severe nationwide fuel shortages after U.S. blocks shipments
In January, the U.S. blocked nearly all fuel supplies to Cuba after pushing the Venezuelan government to cut off fuel supplies to Cuba and threatening tariffs on any other countries that supplied fuel to Cuba. Prior to the ousting of Venezuela’s President Maduro, Venezuela supplied the majority of Cuba’s fuel. Since then, fuel shortages across Cuba have rapidly worsened. On May 14, the Cuban government indicated that Cuba’s fuel reserves had run completely dry and severe shortages were likely to continue indefinitely. The U.S. has since permitted a handful of shipments from Venezuela, Russia, and Hong Kong-flagged vessels under humanitarian guises, but these small shipments have not been anywhere near sufficient to satisfy the country’s current need.
Fuel shortages have disrupted trucking and logistics networks responsible for transporting food, industrial supplies, and consumer products across the island. Delays in fuel availability could increasingly constrain last-mile delivery operations and port-to-warehouse transportation systems. Additionally, the aviation sector has also experienced growing operational disruptions over fuel shortages, with airlines reducing or suspending routes to Cuba due to difficulties securing aviation fuel, reduced passenger demand, payment and operational constraints, and deteriorating local operating conditions. Affected carriers include Air Canada, WestJet, Air Transat, LATAM Perú, Air France, Iberia, Turkish Airlines, and Rossiya Airlines. Reduced flight frequency and route suspensions have increased cargo transit times, diminished available cargo capacity, and complicated supply flows into the island.
Potential risk scenarios for Cuba-U.S. relations
Amid the recent escalation in U.S.-Cuba tensions, it is unclear how or when the situation is likely to be resolved. In the meantime, companies in the region can expect further U.S. sanctions on Cuban targets, disruptions to shipping to Cuba, and sustained power and fuel disruptions due to the continued U.S. fuel blockade.
The Trump administration appears likely to continue increasing economic pressure on Cuba in the near future. Following the May 1 expansion of sanctions targeting foreign firms operating in key sectors of the Cuban economy, additional restrictions could target maritime transport, fuel imports, and logistics operations associated with Cuban state-linked entities such as GAESA. Such measures could further isolate Cuba from international transportation and trade networks while increasing compliance risks for shipping companies, and commodity traders operating in the Caribbean region.
Additional sanctions would likely worsen shortages of fuel, industrial materials, food products, and spare parts across Cuba, while also increasing operational uncertainty for international firms with indirect exposure to the island. Maritime disruptions could also intensify further throughout the Caribbean if additional ocean carriers suspend bookings to Cuba or reduce regional services due to sanctions concerns.
Additionally, Cuba’s ongoing fuel shortages and infrastructure deterioration are likely to continue disrupting industrial and transportation activity across the island in the coming months. Continued restrictions on fuel imports, combined with aging infrastructure and financial constraints, could contribute to prolonged blackouts, transportation disruptions, and broader operational instability. Fuel shortages may increasingly affect trucking operations, maritime logistics, airport activity, and industrial production, particularly in sectors heavily dependent on imported fuel and stable electricity supply.
Although direct military conflict between the U.S. and Cuba remains less likely than continued economic escalation, it remains possible amid persistent threats by President Trump. Although the U.S. took similar action in Venezuela without initiating a protracted conflict, the distribution of power between a group of Cuban officials means that it would be much more difficult to target key political figures directly.
On the other hand, the Cuban military is not known to be large or well-funded enough to provide strong resistance to U.S. forces, relative to countries like Iran. Nevertheless, Cuban leaders have affirmed plans to resist any U.S. invasion and could try to target nearby U.S. assets, including the U.S. military base at Guantanamo Bay, U.S. military or commercial vessels in the Caribbean, or even sites in nearby Florida.
Additional U.S. naval deployments, maritime inspections, or military activity near Cuban waters could further disrupt shipping operations across parts of the Caribbean and increase operational risks for commercial vessels transiting near the Florida Straits and Gulf of Mexico.
On a global scale, any perceived increase in Cuban military coordination with countries such as Russia, China, or Iran could escalate U.S. tensions with these countries and result in further trade restrictions or sanctions.
In contrast, a less likely but possible future scenario involves limited negotiations or informal agreements between Washington and Havana aimed at reducing tensions and stabilizing essential trade and transportation activities. Under such a scenario, the U.S. could allow limited blockade and sanctions exemptions for humanitarian trade or selected commercial activities to prevent a further deterioration of Cuba’s economic and infrastructure conditions. Partial de-escalation could also reduce immediate operational pressure on sectors such as mining, tourism, transportation, and import-dependent industries across the island. Nevertheless, a rapid normalization of U.S.-Cuba relations remains unlikely given ongoing political tensions and broader geopolitical considerations.
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