Trump signs law that could hit India with 100% tariff over Russian oil

Global markets are on edge after US President Donald Trump signed a law that threatens India with a 100% tariff. Trump has signed a sanctions law targeting Russia and Iran that gives him the power to impose tariffs of up to 100% on countries buying large volumes of energy from or through Russia. Along with China, India is a major buyer of Russian oil, putting it among the main countries in Trump's sights.

If Trump actually imposes a 100% tariff on India, the impact could be significant, since India and the United States are major trading partners and India's exports to the US are substantial.

The law is called the Lindsey O. Graham Russia and Iran Sanctions Act 2026. It targets five countries that buy large quantities of crude oil from Russia: China, India, Slovakia, Hungary and Azerbaijan. The bill passed the US Senate last August by a vote of 86-11. It was subsequently approved, and the White House has now said that President Trump has signed it.

The law does not only cover Russia but also widens the scope of sanctions already in place on Iran. Notably, Trump now has the authority to impose tariffs of up to 100% on countries that buy oil and gas from Russia. Under the law, the US Trade Representative will review this list every 180 days. India, however, has said clearly that it will not let the decision compromise its interests.

India has been steadily buying oil from Russia since the Russia-Ukraine war began, and its purchases of this cheaper crude have kept rising. India currently sources more than 40 percent of its total oil requirement from Russia. In August 2026, India bought around 2.08 million barrels of crude oil a day from Russia. In July, the figure had reached 2.82 million barrels a day.

If fear of the 100% US tariff pushes India to replace Russian oil with supplies from other countries, its import bill will rise sharply. Buying costlier oil would also raise the risk of inflation in the country, particularly through higher petrol and diesel prices, which would hit ordinary people hard.

The US currently levies an 18% tariff on India, but if India continues buying Russian oil despite the new law, it could face a 100% tariff. This would directly hit India's export bill. Higher tariffs would make Indian goods costlier in the US, and American buyers could turn to cheaper alternatives from Bangladesh, Vietnam and other countries instead, hurting India's exports considerably.

To understand the impact of a 100% US tariff, it helps to look at India's exports to the US. Textiles, gems and jewellery, engineering goods, leather goods, marine products and chemicals are exported to the US in large volumes. A tariff could reduce demand for these goods.

According to the latest trade data released by the ministry, India's exports to the US in August 2026 rose 21.83 percent from the same period last year to 8.4 billion dollars (more than Rs 80,000 crore), while India's imports from the US rose 65.78 percent to reach 5.97 billion dollars.