India faces a sharp increase in tariff risk within the US market following the enactment of a new American law. The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed into law by US President Donald Trump on September 18, allows for tariffs of up to 100% on imports from countries identified as major purchasers of Russian crude oil and natural gas.
The Global Trade Research Initiative (GTRI) highlights the significant shift from an earlier 18% tariff rate mentioned in a February 6 joint statement to the new law's provision for much higher duties. This legislation directly targets countries like India and China, which are among the five largest foreign buyers of Russian energy.
From 18% to 100%: The Tariff Escalation
Previously, a joint statement referenced an 18% tariff rate. However, the new law establishes a statutory mechanism that could see tariffs soar to 100%. While this 100% rate represents the maximum possibility under the legislation, it is not an immediate imposition on Indian goods. The actual impact will depend heavily on the specific rates, products, and implementation timeline announced by the US administration.
GTRI suggests that Washington could leverage this tariff threat to pressure India into significantly reducing its purchases of Russian oil or making concessions in a bilateral trade agreement. The US Senate passed the legislation on August 7, followed by the House of Representatives on September 16, before its final signature.
Implementation Timeline and India's Response
The new law is slated to take effect within 30 days of its signing. During this period, the US Trade Representative will identify the countries subject to these potential tariffs and recommend specific rates. Typically, affected countries would then have 180 days to either decrease their Russian energy imports or engage in negotiations with Washington, though the US President retains the power to shorten this timeframe.
For India, continued purchases of discounted Russian crude have been crucial for reducing its import bill, enhancing energy security, and managing inflation. GTRI cautions against sacrificing these long-term energy interests for temporary tariff relief. The think tank advises India to continue buying Russian oil as long as it remains commercially competitive and to negotiate firmly with the US.
The precise implications for Indian exports will become clearer only after the US announces the specific tariff rates, the products covered, and the schedule for implementation.