500% Tariff on India? Trump Okays Bill Targeting Purchase of Russian Oil

U.S. President Donald Trump reportedly has thrown his weight behind the bipartisan 'Sanctioning of Russia Act 2025', a legislative proposal that threatens to impose punitive tariffs of up to 500% on nations, including India, that continue to purchase Russian crude oil. 

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Legislative Escalation

The Bill aims to cut off funding for Moscow's military operations and has been formally approved by President Trump according to U.S. Senator Lindsey Graham, a close congressional ally. The legislation may be brought for a bipartisan vote as early as next week and proposes a 500% duty on goods and services imported into the U.S. from countries that "knowingly engage in the exchange of Russian-origin uranium and petroleum products".
Senator Graham said the Bill would give the Trump administration "tremendous leverage" to hold major economies like India, China, and Brazil to account for continuing to source energy from Russia despite Western sanctions.

Impact on India-US Trade

This proposed law further increases economic pressure from Washington. When President Trump assumed power again in January 2025, he vowed to tackle nations that evade United States sanctions. The subsequent rise in tariffs by August 2025 to 50% was because of Indian exports acquiring Russian oil. The 25% tariff is based on buying Russian oil.

Oil Imports Winding Down

Early figures suggest the squeeze is already distorting trade patterns. India's imports of Russian crude plunged-from approximately 1.8 million barrels per day in November 2025 to about 1.0 million bpd in December 2025. And Reliance Industries, the country's largest private refiner and one of the biggest buyers of Russian oil, reportedly took no Russian cargoes in the first weeks of January 2026 and is not expected to take any for the remainder of the month. It seems Indian refiners may be shying away from Russian supply to avoid tightening US sanctions.

Diplomatic Friction

The Indian government under Prime Minister Narendra Modi has resisted the suggestion that the government promised to stop buying oil from Russia. The Indian government claims that its energy policy is solely guided by national interest and cost considerations because of fluctuating global fuel prices.

Effect on India US Trade and Nifty Oil

Markets have also acted promptly, and the Nifty Oil and Gas index has displayed an indication of rising volatility as the need to overcome supply chain hiccups weighs heavily on the minds of traders. The likes of Reliance and even Public Sector companies such as ONGC continue to attract attention as it faces twin pressures: Tariff and Supply Chain.

Looking Closer: The Tariff Mechanism

The Sanctioning of Russia Act 2025 imposes strict liability on persons trading with the sanctioned nation. Instead of targeting specific firms, the bill takes a more clever approach by hitting the country's overall trade balance, leveraging access to the U.S. market. A tariff as high as 500% effectively blocks trade by making doing business prohibitively expensive for those in line with the rules.
With the bill now poised for a possible vote next week, global markets are bracing for another round of protectionist whipsaws and the uncertainty that accompanies them.