The US Congress passed legislation late Wednesday that gives President Donald Trump sweeping new powers to impose punitive tariffs of up to 100 per cent on major buyers of Russian energy products, including India.
The US House of Representatives cleared the Lindsey O Graham Sanctioning Russia and Iran Act of 2026 by a vote of 262-159. The legislation now goes to the White House for Trump’s approval.
Passing the legislation does not automatically lead to tariff imposition. However, US President Trump now has the discretion to impose the duty.
Meanwhile, New Delhi has been monitoring the situation for further developments, the Ministry of External Affairs (MEA) said in a press statement. It emphasised that India would continue to ensure energy security through diversified sourcing and based on evolving market dynamics.
“The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests. Government will work closely with Indian trade and industry bodies to deal with the implications of these developments,” the MEA said in its statement.
Russia has emerged as the top source of crude oil for India in the last four years as Moscow offered discounts following the Russia-Ukraine war in 2022. Russia accounted for around 30 per cent of India’s crude oil imports in 2025-26 (FY26).
The US legislation comes seven months after Washington withdrew a 25 per cent Russia-related levy on Indian goods. The White House removed that tariff in February, citing steps taken by India in relation to Russian oil and broader bilateral cooperation.
India and the US have had several discussions on the issue of Russian oil purchases in the past. “This issue has been discussed at high levels in recent months with various US interlocutors. Its potential implications for not just the bilateral relationship but also the international energy market have been very clearly articulated by the Indian side,” the MEA said.
The legislation has cast uncertainty over the ongoing India-US negotiations for a Bilateral Trade Agreement (BTA). While officials in the commerce ministry previously reiterated that both sides remain engaged on the trade deal, officials declined to confirm on Thursday if the BTA was still on the table.
India and the US are likely to hold bilateral trade discussions on the sidelines of the G20 Trade Ministers’ meeting scheduled for September 30-October 1 in Wisconsin.
Experts see the legislation as the US’ attempt to gain an edge in negotiations for the trade deal.
“Washington will now threaten tariffs of up to 100% and then offer a lower rate if New Delhi cuts Russian oil purchases and accepts concessions under a deeply unequal bilateral trade agreement,” Global Trade Research Initiative Founder Ajay Srivastava said. “India should not trade away its energy security for temporary tariff relief.”
So far, New Delhi has maintained that it will proceed with the trade agreement only after Washington ensures a tariff advantage for Indian exporters over competing economies. Commerce and Industry Minister Piyush Goyal has reiterated this position time and again.
While the actual impact of new tariffs on Indian exports can only be assessed after the US announces the tariff rates, product coverage and implementation timetable, experts suggest a significantly higher tariff imposed under this Bill would likely cause India’s exports to the US to fall materially again.
“India’s average monthly exports to the US had dropped to $ 6.5billion during Sep-25 to Feb-26 (when India faced 50 per cent tariffs), versus $ 8.1billion in the preceding six months. This has now risen to $ 8.5billion (from Mar-26 to Aug-26) with the tariff rate having dropped to 10 per cent,” Emkay Global Chief Economist Madhavi Arora said.
Indian goods currently face an additional 10 per cent tariff in the US under Section 301 of the US Trade Act of 1974.
