US Sanctions Law Gives Trump Power to Impose Up to 100% Tariffs on
Countries Buying Russian Oil — India Faces Renewed Trade Uncertainty
India is trying to secure affordable energy
while preserving a crucial relationship with Washington, a balancing act made harder
by turmoil in global energy markets.
1.
New U.S. sanctions law
o
President Donald Trump has signed a law giving him
authority to impose tariffs of up to 100% on goods from countries that
continue buying Russian energy.
o
The stated Congressional objective is to reduce
revenue financing Russia's war in Ukraine.
2.
Wide presidential discretion
o
The law gives Trump substantial discretion over whether,
when and how to impose the additional tariffs.
o
It remains uncertain whether and when Indian goods
would actually face higher U.S. tariffs.
3.
Direct implications for India
o
The law increases U.S. leverage over India because
India remains heavily dependent on Russian crude.
o
India imports more than 90% of its crude-oil
consumption, while Russian crude reportedly represented about 50% of
India's crude imports during summer 2026, according to Kpler.
4.
Iran war has increased India's dependence on Russia
o
Disruption of Middle Eastern oil supplies following
the Iran war has made Russian crude more difficult for India to replace.
o
This complicates U.S. pressure on India to reduce
Russian oil purchases.
5.
Earlier India-U.S. trade understanding disrupted
o
In February, Washington and New Delhi reached a
trade agreement under which the U.S. would reduce tariffs while India would
reduce its purchases of Russian oil.
o
Subsequently:
§ The U.S.
Supreme Court restricted Trump's earlier tariff authority.
§ The Iran
war disrupted Persian Gulf oil supplies.
§ The U.S.
Treasury allowed India and other countries greater scope to buy Russian oil.
6.
India's response
o
India's Foreign Ministry said India remains
committed to energy security for its 1.4 billion people.
o
It said India would continue diversifying oil
suppliers according to market conditions.
o
India also warned that the new U.S. measure could
have implications for both the bilateral relationship and the international
energy market.
7.
India's earlier experience with U.S. pressure
o
Washington has previously pressured India to reduce
purchases of oil from Venezuela and Iran.
o
U.S. policy toward those suppliers subsequently
changed as diplomatic and energy-market conditions evolved.
8.
India's core dilemma
o
India has to balance:
§ Maintaining
its strategic and trade relationship with the United States; and
§ Securing
sufficient affordable energy.
o
At the same time, the U.S. itself has become an
increasingly important energy supplier to India.
9.
Sharp rise in U.S. LPG supply
o
Since the war began, the U.S. share of India's cooking-gas
imports increased to more than 50%, compared with 8% in December,
according to the article.
10.
Tariff impact on U.S. importers
o
Ajay Srivastava of the Global Trade Research
Initiative argued that India should not focus solely on the tariff rate.
o
His stated view is that U.S. tariffs are collected
from American importers, potentially increasing costs in the United
States while affecting Indian exporters.
11.
Trade deal remains uncertain
o
According to Srivastava, the new authority
potentially restores some of the bargaining leverage lost after the Supreme
Court restricted Trump's earlier tariff powers.
o
The India-U.S. trade agreement remains in limbo,
while the new tariff authority could provide Washington with additional
negotiating leverage.
12.
China factor
o
China purchases more Russian oil than India
and is also potentially subject to the new U.S. law.
o
Indian officials and analysts are therefore
watching whether Washington applies comparable pressure to Beijing.
13.
BRICS dimension
o
The issue comes amid India's participation in BRICS
and its simultaneous strategic relationship with the United States.
o
At the recent BRICS summit in New Delhi, Narendra
Modi, Xi Jinping and Vladimir Putin appeared together, highlighting
cooperation among major non-Western powers.
14.
Strategic balancing
o
The article describes India's broader dilemma as
balancing its relationship with Washington against China's growing influence
and the continuing importance of Russia for energy supplies.
o
Repeated changes in U.S. energy and trade policy
have raised questions in New Delhi about the durability of any new bilateral
bargain.
Key
Takeaway
The new U.S. law does not
automatically impose a 100% tariff on Indian goods; it gives President Trump
the authority to impose such tariffs on countries continuing to buy Russian
energy. For India, the principal issue is the uncertainty over how that discretionary
power may be used while Russian crude remains an important source of India's
energy supply.
A
new sanctions law giving President Trump broad authority to impose steep tariffs
on countries that buy Russian oil adds a new layer of uncertainty to India’s already
fraught trade relationship with the United States.
The
bill, signed by President Trump on Friday, gives him the power to impose tariffs
of up to 100 percent on goods from countries that continue to buy Russian energy.
The aim of Congress was to choke off the revenue that finances Moscow’s war in Ukraine.
The
law, however, gives Mr. Trump considerable discretion over when and how to wield
those tariffs, and it’s not clear when — or even whether — he would impose tariffs
that would raise the cost of American imports of Indian goods.
To
India, the law is seen as a threat, potentially increasing Mr. Trump’s leverage
even as he explores business deals with Russia.
The
timing puts the Indian prime minister, Narendra Modi, in a tight spot. India imports
more than 90 percent of the crude oil it consumes, and its reliance on Russia has
climbed again as the war in Iran has disrupted supplies from the Middle East. Russian
crude accounted for roughly half of India’s imports this summer, according to Kpler,
a global maritime data company.
The
new law is the latest in a series of shifting American policies that have repeatedly
forced India to adjust its Russian oil purchases.
In
February, days before the war against Iran started, Washington and New Delhi struck
a trade agreement under which the United States would lower tariffs and India would
reduce its intake of Russian oil.
Then,
in quick succession, the assumptions underlying that bargain fell apart. The Supreme
Court curtailed Mr. Trump’s ability to use the tariff powers that had helped him
negotiate with India. The war in Iran made it difficult to get oil from the Persian
Gulf. And the Treasury Department allowed India and other countries to compensate
by buying more Russian oil.
Now
Washington is again threatening to punish India for buying oil that has become harder
to replace.
India has responded forcefully.
“India
remains firmly committed to ensuring energy security for its 1.4 billion people,”
the country’s foreign ministry said on Thursday, adding that it would continue to
diversify its suppliers according to market conditions. The ministry warned of “potential
implications for not just the bilateral relationship” with the United States but
also the international energy market.
India
has faced a similar predicament before. Washington has pressed New Delhi to stop
buying oil from Venezuela and Iran, only for American policy toward those suppliers
to shift as diplomatic relations and energy prices changed.
This
has forced India to balance two imperatives. It wants to preserve its relationship
with the United States, while securing enough affordable energy for the world’s
most populous country.
Complicating
that balance, the United States is an increasingly important energy supplier to
India even as it threatens penalties over New Delhi’s purchases elsewhere. Since
the war began, India’s share of cooking gas imports from the United States rose
to more than 50 percent, up from 8 percent in December.
Ajay
Srivastava, a former Indian trade official who runs the Global Trade Research Initiative
in New Delhi, said India should not be overly fixated on American tariffs. Tariffs
can damage some Indian exporters, he argued, but they are collected from American
importers and ultimately raise costs in the United States.
In
Mr. Srivastava’s view, the new law restores some of the bargaining power Mr. Trump
lost when the Supreme Court restricted his earlier tariff authority. The trade agreement
negotiated with India has remained in limbo. But the new authority would give Washington
something substantial to offer — a lower tariff in exchange for Indian concessions.
“My
problem,” Mr. Srivastava said, “is that signing the trade deal does not buy you
peace from any of this.”
India
has watched the United States strike deals with major trading partners, only for
disputes over tariffs and the terms of those agreements to re-emerge.
And
India is not the only country trying to determine what the new law means for its
relationship with Washington.
China
buys more Russian oil than India and also falls within the new law’s reach. Indian
officials and analysts are looking to see whether Washington applies the same pressure
to Beijing that it does to New Delhi. The question carries weight because India
has spent years drawing closer to the United States, partly as a counterweight to
China.
Last
weekend, Xi Jinping, China’s top leader, and President Vladimir V. Putin of Russia
joined Mr. Modi in New Delhi for the BRICS summit, posing together in a conspicuous
display of non-Western cooperation. Mr. Xi is expected to meet Mr. Trump in Washington
in the coming days.
Among
the major BRICS powers, India has had a strong strategic incentive to deepen its
partnership with Washington. C. Raja Mohan, a professor at Jindal Global University,
described India’s dilemma as a choice between two uncomfortable alternatives.
“Do
you want to jump from the American frying pan into the Chinese fire?” Mr. Mohan
said.
China’s
growing power gives India a powerful reason to preserve its relationship with Washington.
But repeated shifts in American demands over energy and trade have also raised questions
in New Delhi about how durable any new bargain would be.
“India
should not do any deal until U.S. policy stabilizes,” Mr. Srivastava said.