Author: Akshay Published Date: 25 June 2025
The Threat: A 500% Tariff “Economic Bunker‑Buster”
Washington is considering a new legislative blow aimed not just at Russia, but at nations—like India—that continue to import Russian oil, gas, and uranium. The Sanctioning Russia Act of 2025, introduced by Senators Lindsey Graham (R‑SC) and Richard Blumenthal (D‑CT) in April, includes provisions for a staggering 500% tariff on U.S. imports from any country engaging in such trade.
This has been dubbed an “economic bunker‑buster”—a heavy‑hit tactic aimed at disrupting financial lifelines that sustain Russia’s military campaign in Ukraine. India, which now buys around 2 million barrels per day of discounted Russian crude (about 39% of its total imports), finds itself directly in the crosshairs.
Why This Bill Sounds So Extreme
A 500% tariff isn’t normal. For comparison:
- Current maximum U.S. tariffs — around 55% on Chinese goods.
- Proposed tariff — nine times higher, enough to virtually halt any U.S. import from affected countries.
Proponents argue that if conventional sanctions haven’t swayed Russia, nothing short of this is acceptable. But critics—inside and outside of Congress—warn it could trigger a global trade war, alienate alliances, and backfire economically.
U.S. Politics & Presidential Leeway
Despite its strong support—80+ bipartisan senators backing it—the bill’s fate is uncertain in the White House.
Former President Trump, among others, is pushing for exemptions and flexibility, preferring to limit automatic mandates and giving the executive branch discretion to sanction only in certain cases.
Proponents, like Graham, have signaled openness to carve-outs—for example, for countries aiding Ukraine—but have reaffirmed the bill’s broad and aggressive stance.
Ultimately, it may be a middle ground: tariffs remain mandatory, but the President retains waiver authority to handle sensitive alliances like India.
India’s Stakes: Energy, Economy & Exports
1. Energy Security
Over 39% of crude imports came from Russia last fiscal year. This deal gives India access to cheaper oil at a time when the global market remains volatile. But if the bill passes, U.S. tariff pressure could choke off refinancing and insurance for Russian oil cargoes, making this supply route untenable.
2. Trade Impact
India exports $66 billion worth of goods to the U.S.—pharmaceuticals, machinery, and engineering products. A crippling 500% tariff would destroy demand overnight, cripple export competitiveness, and potentially jeopardize a long-awaited trade deal.
3. Diplomatic Pressure
New Delhi faces a dilemma: maintaining affordable energy security vs. retaining a healthy relationship with Washington. Both countries are negotiating a broader trade and geopolitical roadmap; hitting India with such tariffs would strain the ties badly, just as a deal is taking shape .
Could It Backfire on the U.S.?
Critics highlight how damaging a sweeping tariff might be even for the U.S.:
- Consumer costs could skyrocket in essential sectors—medicines, machinery, agricultural products—all critical for daily American lives.
- Allied tensions—Tariffs against partners like India, Europe, and Japan could undercut diplomatic unity and push affected countries to align with other power blocs.
Many experts warn this might be more dangerous than helpful—a self-inflicted wound.
What Could the Final Bill Look Like?
Expect the finalized version to include:
- Mandatory 500% tariff trigger upon Russia failing peace benchmarks.
- Presidential waiver powers for key allies (e.g., India, EU, Japan).
- Sunset clause or phased approach—step-up tariffs, not an instant full block.
- U.S. imports carve-outs: Stop applying tariffs to the U.S.’s Russian uranium source.
This would balance strong sanctions with geopolitical realities.
What Happens Next & Timeline
- Senate markup—debate over exceptions and waiver language.
- Negotiation with the White House—to avoid a veto.
- House of Representatives sign‑off—could take another month or more.
- Implementation stage—if passed, compliance is triggered based on Russia’s actions timeline.
Given procedural timelines, a final vote might come by late summer, with implementation in late 2025 or 2026.
How India Is Responding
Publicly, India has held firm, stating it “buys oil on commercial terms” and is exercising its sovereign right.
Behind closed doors, top officials from PM Modi to Commerce Minister Goyal are engaging with U.S. counterparts in an emerging trade negotiations framework.
They may offer:
- Energy alternatives from the Middle East, the U.S., and Africa
- Longer-term contracts from Western suppliers
- Political contribution to Ukraine (e.g., humanitarian aid) to satisfy U.S. concerns
But alignment on energy is politically sensitive domestically and remains a tough ask.
A sweeping 500% tariff under the Sanctioning Russia Act of 2025 represents a high-stakes strategy—the most aggressive non-military leverage ever proposed by the U.S. Its goal: to force global energy buyers to abandon Russian crude. But it risks triggering global backlash—in trade slowdowns, retaliatory tariffs, and public blowback.
For India, this legislation puts energy security front and centre of strategic diplomacy. Unless exemptions are secured or alternatives found, New Delhi may navigate a delicate balancing act between securing cheap energy and maintaining its trade future.