A New Tariff Threat Reshapes US-India Trade
Just when US importers of Indian-origin goods thought they had navigated the worst of the tariff storm, a new threat arrived from Capitol Hill. On August 7–8, 2026, the US Senate passed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 — legislation that could authorize tariffs of up to 100 percent on goods from India, China, and other major buyers of Russian energy. The bill now moves to the House of Representatives, and its fate there will shape the cost of importing Indian pharmaceuticals, textiles, gems, engineering goods, and machinery for months to come. Understanding the full arc of how Indian energy policy and US trade policy became this entangled is no longer just a geopolitics exercise — it is a supply-chain imperative.
What the Graham Act Actually Does
The bill, titled the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, allows the president to impose tariffs of up to 100 percent on the top five purchasers of Russian oil or natural gas. The legislation allows the president to impose targeted tariffs on imported goods from countries that buy the vast majority of Russian oil or gas and enable Russian sanctions evasion, and it limits these tariffs to the five largest importers of Russian crude oil or gas.
Section 113 of the Act specifically targets the five largest importers of Russian energy. India, China, Slovakia, Hungary and Azerbaijan are named as countries that could face punitive tariffs. The provision also extends to nations enabling sanctions evasion through shadow fleet tanker operations, a mechanism widely used to bypass restrictions on Russian oil exports.
Known as the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, the bill sets a maximum tariff rate of 100 percent but does not automatically impose that rate. Instead, the US Trade Representative would determine the actual tariff. The legislation also gives the president the authority to waive the measures, provided the administration certifies the decision to Congress. There are exceptions for countries that import less than 15 percent of their natural gas from Russia and are taking significant steps to reduce the imports. The legislation also directs the US Trade Representative to review the list every 180 days, ensuring that countries cannot escape coverage by temporarily reducing purchases.
Why India Is in the Crosshairs
India is the largest buyer of Russian seaborne crude and has shifted between first and second position alongside China as the top buyers of Russian oil since Moscow's full-scale invasion of Ukraine in February 2022. India relies heavily on oil imports, covering around 90 percent of its needs, and importing cheaper Russian oil has helped lower its import costs since Moscow invaded Ukraine and since Western nations slapped sanctions on Russian energy exports.
While Washington claims India's import of discounted Russian crude is helping fund Moscow's war effort, Delhi insists it is merely trying to ensure energy security amid volatile global markets and rising geopolitical instability. Analysts suggest India saved approximately $17 billion by increasing imports of discounted Russian oil. That economic rationale has made New Delhi's position difficult to shift — and has made India a consistent focal point of US tariff pressure.
The Tariff Escalation That Already Happened
This is not the first time Russia's oil has dragged Indian goods into a US tariff fight. The timeline matters for any importer modeling supply-chain risk.
On July 31, 2025, Trump announced a 25 percent tariff on all Indian goods and said Washington would levy a penalty if India continued to buy Russian oil. On August 7, 2025, Trump boosted tariffs to 50 percent on Indian goods shipped to the US, citing the Asian country's continued purchase of Russian oil — the highest tariff rate among US trade partners at the time.
The 50 percent rate, half of which was punishment for India's buying of Russian oil, was also expected to damage the Indian economy, which has the United States as its largest trading partner and has become a growing hub for US tech companies relocating their manufacturing from China. Trump's tariffs of up to 50 percent put at risk an estimated $37 billion worth of Indian exports to the US, with labor-intensive sectors like textiles, gems, and jewelry particularly vulnerable to significant job losses.
India began to slow its oil purchases from Russia under this pressure. In January 2026, purchases were around 1.2 million barrels per day, projected to decline to about 1 million barrels per day in February and 800,000 barrels per day in March. The reduction gave Washington enough political cover to de-escalate.
The February 2026 Reset — And How SCOTUS Complicated It
After ten months of escalating tariffs that pushed duties on Indian goods to 50 percent, the US and India hit reset. The February 6, 2026 announcement slashed tariffs to 18 percent and unlocked a US$500 billion purchasing intent framework. Under the agreement, India committed to reducing Russian oil imports and planned to more than double its annual purchases of US goods.
However, the legal ground shifted quickly. Following the Supreme Court's February 2026 decision invalidating the Trump administration's tariffs under the International Emergency Economic Powers Act, USTR initiated new Section 301 investigations as a pathway to replace the IEEPA tariffs. The 10 percent across-the-board tariff imposed under Section 122 reached its statutory 150-day limit on July 24, 2026, and lapsed automatically. Rather than allowing tariffs to revert to zero, Washington shifted the surcharge onto Section 301, using a forced-labor investigation to justify new duties on imports from 60 economies, including India.
Under the new Section 301 framework, goods imported from India — among fifteen other countries — face a 10 percent tariff. Bilateral trade data show goods imports from India at approximately $103.8 billion in 2025, dominated by textiles and garments, engineering goods, chemicals, gems and jewellery, machinery and plastics, alongside zero-tariff pharmaceuticals. Many manufactured and labor-intensive products now face their normal most-favored-nation duty plus a 10 percent Section 301 charge, while steel, aluminum and certain auto components continue to pay separate Section 232 tariffs of 25 to 50 percent.
What the Graham Act Means for US Importers of Indian Goods
The Senate's 86-to-11 vote is lopsided but the path through the House is less certain. Broad support in the Senate may not be enough to secure House passage, with some lawmakers and industries wary that new tariff powers for Trump could raise costs for US importers and consumers while exposing Republicans to political blowback. Representatives Gregory Meeks of New York and Don Beyer of Virginia stated they still had fundamental concerns about the tariff powers for Trump.
Even if the bill passes the House, the bill's sponsors have argued that tariffs should be high enough to discourage major buyers, particularly China and India, from continuing to purchase Russian energy, but the legislation gives the administration considerable flexibility over how aggressively to use the measure. A presidential waiver remains available, and the US-India strategic relationship — including India's growing role as a manufacturing alternative to China — gives both governments strong reasons to negotiate.
Nevertheless, for importers, the worst-case scenario is real and quantifiable. A 100 percent tariff on US imports from India would be catastrophic for bilateral trade. India exported approximately $83 billion in goods to the United States in FY2026, making it one of India's most important export markets. A 100 percent tariff would effectively double the cost of Indian goods at the US border, pricing most of them out of the market. Categories most exposed include generic pharmaceuticals, apparel, gems and jewelry, and engineering components — exactly the goods that many US buyers have been routing through India as a China-plus-one alternative.
India's Position and the Diplomatic Wildcard
India's Ministry of External Affairs stated that New Delhi is tracking developments in Washington with care, with MEA spokesperson Randhir Jaiswal emphasising that India's energy policy is firmly rooted in national interest and the need to secure fuel supplies for its 1.4 billion citizens. He reiterated that India's sourcing strategy is diversified and includes imports from the United States, and underlined that India remains engaged with relevant stakeholders in the US at multiple levels.
Notably, the legislation does not similarly target US allies in Europe that continue to purchase Russian energy — a point New Delhi has repeatedly raised as evidence of selective targeting. India's leverage in the negotiation includes its status as one of the largest buyers of US defense equipment, its growing role in US semiconductor and pharmaceutical supply chains, and the strategic importance of the US-India relationship in the Indo-Pacific.
How ASR Can Help
Every new layer of tariff risk on Indian-origin goods changes your landed-cost calculations, import documentation requirements, and supplier contract terms. At ASR WorldWide Express, we work with trusted licensed customs broker partners to help importers of Indian pharmaceuticals, textiles, machinery, and specialty goods stay compliant and cost-aware under rapidly changing duty regimes. Whether you need help modeling tariff scenarios, coordinating customs clearance, or restructuring inbound freight flows from India, our team is ready.
Call us at +1 786 373 3003 or email shipping@asrwe.com to speak with a freight specialist today.
Important Disclaimer
This article is intended for informational purposes only and does not constitute legal, tax, or customs compliance advice. Tariff rates, legislation status, and regulatory requirements change frequently. Importers should consult a licensed customs broker or qualified trade attorney before making sourcing, pricing, or compliance decisions based on any information contained here.
