US Sanctions Bill on Russia Gets Trump’s Backing; India May Face 500% Tariff Threat Over Russian Oil

A landmark bipartisan sanctions bill aimed at economically isolating Russia has received President Donald Trump’s approval, placing India at the center of renewed pressure due to its large Russian oil purchases.

What Happened

On January 7, 2026, President Trump “greenlit” the Sanctioning Russia Act of 2025, a bipartisan initiative led by Sen. Lindsey Graham (R–South Carolina) and Sen. Richard Blumenthal (D–Connecticut). The legislation has more than 80 Senate co-sponsors and is expected to move to a vote in the week of January 8, 2026.

Graham announced the approval at a White House meeting, calling it a tool to pressure countries buying discounted Russian oil. He named China, India, and Brazil as potential targets, stating the bill would enable Trump to “punish those countries who buy cheap Russian oil fueling Putin's war machine.”

The Tariff Mechanism: 50% Already, Up to 500% Ahead

India is already under tariff pressure. In August 2025, the Trump administration imposed a 25% additional tariff on Indian goods over Russian oil imports, later increased to 50% on August 27, 2025 under IEEPA authority.

The new bill authorises tariffs of up to 500% on countries that “knowingly engage in the exchange of Russian-origin uranium and petroleum products.” It also mandates tariffs of at least 500% on all Russian imports. These constitute secondary sanctions, targeting third-party countries rather than Russia directly, and grant the US President broad discretion.

Why India Is Targeted

Before the Ukraine war, Russian crude accounted for only 0.2% of India’s imports. After discounts emerged post-February 2022, India’s imports surged for economic and energy security reasons. By mid-2024, Russia supplied 35% of India’s crude, with peak imports near 2 million bpd in June 2024.

From February 2022, India imported roughly $168 billion worth of Russian crude, making it the second-largest buyer after China.

Indian refiners, IOC, BPCL, HPCL, and Reliance, maintain they comply with the G7/EU price cap, which intentionally permits oil flows while capping Russian revenue.

Impact on Energy Security

Russian oil helped India manage:

• Inflation
• Fiscal balances
• Supply diversification
• Refinery margins

It is believed that crude could have breached $100+/bbl without India and others buying Russian oil.

Recent Shifts: Russian Oil Imports Decline

India's Russian crude oil imports have experienced a dramatic decline in recent months, falling from approximately 1.8 million barrels per day (bpd) in November 2025 to around 1.2 million bpd in December 2025, marking the lowest level since December 2022. This represents a significant drop from the June 2024 peak when imports reached approximately 2 million bpd. 

Reliance, India’s largest buyer, stated in early Jan 2026 that it did not expect Russian deliveries in January, potentially dropping imports to multi-year lows.

Meanwhile, US crude imports to India surged 92% between April and November 2025.

Diplomatic Factors

India maintains deep strategic ties with both the US (Quad, defense, technology) and Russia (legacy ties, energy).

India’s Ambassador Vinay Mohan Kwatra has held outreach with Sen. Graham seeking relief from tariffs. US officials confirm conversations without announcing policy changes.

India argues it respects global rules. As India’s oil minister has stated, Russian crude is not sanctioned like Iranian or Venezuelan oil but regulated via a G7/EU price cap designed to allow flows while limiting Kremlin revenue.

What a 500% Tariff Would Mean

A 500% ad valorem tariff would multiply import costs by 5x, effectively blocking Indian goods from the US. India exports over $77.5 billion to the US annually, including:

• Pharma
• IT services
• Textiles
• Auto components
• Agriculture

A 500% tariff would be one of the most severe in US trade history.

However, the bill applies to countries that “knowingly engage,” leaving negotiation space if India reduces Russian purchases or meets interpretation criteria, though this depends wholly on presidential discretion.

Implications for India

India faces serious potential consequences:

• Trade: US market access would sharply shrink; IT services could suffer.
• Oil Prices: Ending Russian imports could push crude toward $90–$100/bbl, raising global inflation.
• Energy Mix: India would rely more on Saudi, Iraq, UAE, US, at higher cost.
• Strategic Ties: Tariffs could strain Indo-Pacific cooperation against China.
• Negotiation Leverage: India must choose between cheap oil and US tariffs, each carrying economic trade-offs.

Conclusion

Trump’s approval of the Graham-Blumenthal sanctions bill marks a turning point in US economic statecraft. For India, it sharpens a core dilemma: preserve discounted Russian energy or avoid crippling US tariffs.

India’s recent cutbacks in Russian oil suggest an attempt to compromise, but whether this satisfies Washington remains uncertain. With votes imminent and diplomacy ongoing, the coming weeks will determine whether the 500% tariff threat remains leverage or becomes reality, with major consequences for global energy markets and US-India relations.