Will India really have to pay a 500% US tariff for buying Russian oil? How real is Trump's threat | Explained

(FILES) A general view of the Guwahati Refinery operated by Indian Oil Corporation is pictured in Guwahati on March 30, 2023. (Photo by Biju BORO / AFP)

A proposed US sanctions bill, backed by Trump, could let the president impose a 500% tariff on Indian goods if India keeps buying Russian oil. While not automatic, the threat marks a major escalation in US pressure on India over its energy ties with Russia.

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The idea sounds almost absurd at first glance. A 500 per cent tariff on Indian goods entering the United States simply because New Delhi continues to buy Russian oil. Yet, this is no longer a hypothetical debate. After US President Donald Trump gave his approval to a sweeping bipartisan sanctions bill targeting Moscow, questions are mounting over whether India could soon find itself facing an unprecedented trade penalty.

The proposed law is designed to squeeze Russia’s war economy, but its secondary impact could be severe for countries like India that have refused to fully cut energy ties with Moscow. As Washington weighs punitive tariffs alongside peace talks with Russia, the key question remains. Will India actually have to pay a 500 per cent tariff for purchasing Russian oil?

What the Russia sanctions bill says

Formally titled the Sanctioning Russia Act of 2025, the legislation has been authored by Republican Senator Lindsey Graham and Democratic Senator Richard Blumenthal. The bill gives the US president extraordinary powers to impose tariffs and secondary sanctions on countries that continue to trade in Russian oil, gas, uranium and other key exports.

The text of the bill is explicit. “The President must increase the rate of duty on all goods and services imported into the United States from countries that knowingly engage in the exchange of Russian-origin uranium and petroleum products to at least 500 per cent relative to the value of such goods and services,” it states.

The legislation also authorises visa bans, asset freezes and property blocking sanctions on Russian financial institutions and senior individuals, including the Russian president, if Moscow refuses to negotiate peace, violates an agreement or launches further aggression against Ukraine.

Trump’s signal and the path ahead

Senator Graham said he met Trump earlier this week and that the president had approved the bill. “After a very productive meeting today with President Trump on a variety of issues, he greenlit the bipartisan Russia sanctions bill that I have been working on for months with Senator Blumenthal and many others,” Graham wrote on X.

While a Senate vote could come as early as next week, the bill still faces procedural hurdles and political calculations. Trump retains discretion over how and when to use the powers the legislation grants. That means a 500 per cent tariff is not automatic, but it is now firmly on the table.

Why India is in the crosshairs

India and China remain among the largest buyers of Russian crude, taking advantage of discounted prices after Western sanctions. Graham has been blunt about the bill’s intent. “This bill will allow President Trump to punish those countries who buy cheap Russian oil fueling Putin’s war machine,” he said, referring to Russian President Vladimir Putin.

He added, “This bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivise them to stop buying the cheap Russian oil that provides the financing for Putin’s bloodbath against Ukraine.”

India already feels the pressure. Last year, Trump imposed an additional 25 per cent tariff linked to India’s Russian oil purchases, taking total US duties on Indian goods to 50 per cent. A jump to 500 per cent would be economically devastating for exporters, particularly in labour intensive sectors.

Will the US really impose it

Despite the harsh language, several factors suggest the tariff may be used more as leverage than as an immediate weapon. The Trump administration is simultaneously trying to broker a peace deal to end the Ukraine war, with special envoy Steve Witkoff and Jared Kushner leading negotiations. Using the threat of extreme tariffs could be part of that pressure strategy.

There is also an uncomfortable inconsistency. While Washington warns India, the European Union continues to import large volumes of Russian liquefied natural gas. In 2025 alone, EU purchases from Russia’s Yamal LNG project generated €7.2 billion for the Kremlin, highlighting a double standard that weakens the moral force of US pressure on India.

Trump himself has hinted at using tariffs selectively. On January 4, he said, “They wanted to make me happy, basically. Modi is a very good man; he is a good guy. He knew I was not happy, and it was important to make me happy. They do trade and we can raise tariffs on them very quickly. It would be very bad for them,” referring to India’s recent reduction in Russian oil imports.

The likely outcome

For now, a 500 per cent tariff remains a threat rather than a certainty. But the fact that it is written into proposed US law marks a sharp escalation in economic pressure. For India, the challenge will be navigating energy security, strategic autonomy and trade ties with Washington at a time when US policy appears increasingly transactional and selectively punitive.