The U.S. Russia Sanctions Act, now signed into law by President Donald Trump, and its resultant impending tariffs, present a new and substantially different escalation of tensions between the U.S. and India. The law provides the U.S. President the authority to levy tariffs of up to 100% on countries such as India that import large quantities of Russian oil and gas. This is more serious than the penal tariffs that Mr. Trump had levied earlier. The escalation last year of reciprocal tariffs to 50% on India’s import of Russian oil was based on an Executive Order, and could be rescinded through the same method. This latest Act has been passed by the U.S. Congress and so carries a higher order of legal permanence and authority. Mr. Trump will have to justify in writing to Congress any waiver he wants to provide. The 50% tariffs hit Indian exports to the U.S. hard, but the impact was somewhat mitigated by exporters sharing the cost with their American customers. That was, however, a financially devastating and unsustainable bid to retain customers. Sharing a 100% tariff will be impossible for India’s largely micro, small and medium enterprises (MSME) exporters. The 100% tariffs are also over and above the 10% ‘forced labour’ tariffs and the 50% Section 232 tariffs on steel and aluminium. Indian exports to the U.S. will simply become too uncompetitive should these new tariffs come to pass. India has three options before it: cut Russian oil imports, retain those imports and bear the tariffs, or convince the U.S. to implement a low tariff using the “up to 100%” phrasing of the law.

Continuing with Russian oil imports and bearing the tariffs would be a significant blow to India’s export ambitions and MSMEs. The U.S. is India’s largest export destination, accounting for about 20% of its total goods exports. In any case, historical data have shown that India has usually complied with U.S. pressure to cut oil imports from particular countries, including from Russia, vocal claims of strategic autonomy aside. Finding other sources will be difficult. Russia accounted for more than 51% of India’s oil imports as of July 2026, while supplies through the Strait of Hormuz remain constrained. India will have to chivvy countries such as Oman to hasten their expansion of alternative ports. The price of oil remains well above $100 a barrel, meaning finding favourable deals with new suppliers will be increasingly difficult. Union Commerce Minister Piyush Goyal will have much to do during his planned trip to the U.S. at the end of this month for the G-20 Trade Ministerial. There are still 30 days before the U.S. can levy its tariffs. India’s ability to secure a low rate will be a true test of Prime Minister Narendra Modi’s friendship with Mr. Trump.