US-India trade tensions set to escalate? Trump backs Russia sanctions bill that could hit India with up to 500% tariffs, here’s what it means

India-US trade ties may face fresh headwinds after President Donald Trump backed a proposed sanctions bill that could expose New Delhi to tariffs of up to 500% over its continued buying of Russian oil. Responding to a query from news agency ANI, the White House confirmed that Trump is in favour of the legislation after concerns emerged about its future following the death of Senator Lindsey Graham, its lead Republican sponsor.

“President Trump supports the bill,” a White House official said. The proposal, known as the Sanctioning Russia Act, was introduced by Graham and Democratic Senator Richard Blumenthal. If implemented, it would give the American president the power to impose steep secondary tariffs of up to 500% on imports from countries that continue trading with Moscow’s energy sector.

India – one of the main targets

During his campaign for the bill, Graham repeatedly said that the pressure should fall not only on Russia but also on those nations that keep its energy revenues flowing. He often cited India and China, saying that the two countries together account for nearly 70% of Moscow’s oil, gas, and petroleum exports.

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According to Graham, the loss of this demand would increase economic pressure on Russia and could help bring the war in Ukraine to an end. If passed, the legislation would grant Trump dominant powers ever granted by Congress to impose secondary tariffs on nations that keep doing business with Moscow’s energy sector.

The situation grew more complicated following a temporary US Treasury waiver expiry on June 17, 2026. Under the waiver, India was allowed to buy Russian crude without incurring sanctions. The expiration has left India in a legal grey zone.

Trump leaves sanctions section open

Trump also indicated that his administration has not ruled out imposing sweeping secondary sanctions on China and India. Responding to queries in the Oval Office, he said, ” We have to look. That hasn’t been discussed yet.”

Meanwhile, the US President also expressed confidence that the proposed Russia sanctions bill could become law. “There’s a good chance the Russia sanctions bill gets done,” Trump said.

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“They might add Iran, and Hezbollah too,” he said, later adding that Hezbollah may also be included in the sanctions package. The legislation now faces a test in the US Senate. It has also faced resistance within the Republican party.

Indian economy could be hit hard

Economists have warned that if a 500% tariff is imposed, the Indian economy could take a big hit, with estimates indicating GDP could shrink by as much as 0.5%. Export-driven sectors, including pharmaceuticals, textiles, and IT services, are likely to be among the first to feel its impact.

India, however, has consistently maintained that its energy imports are not driven by geopolitical considerations but by national economic needs

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