Trump signs Russia-Iran sanctions law, opens door to 100% tariffs on India
US President Donald Trump has signed the Sanctioning Russia and Iran Act of 2026, allowing tariffs of up to 100% on countries including India and China that buy Russian oil and gas. The law also expands sanctions on Russia’s energy and defence sectors and gives Trump broad discretion over which countries face the new tariffs.
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Context
The United States passed the , allowing the US President to impose tariffs of up to 100% on goods imported from countries that are top buyers of Russian crude oil and natural gas. India, being a major purchaser of Russian energy, is a potential target, raising significant concerns about bilateral trade and India's energy security strategy.
UPSC Perspectives
International Relations
This development underscores the complex nature of strategic autonomy, a cornerstone of India's foreign policy. India has consistently maintained that its purchase of Russian oil is driven by economic necessity and energy security, not geopolitical alignment. The represents the use of secondary sanctions (sanctions targeting third parties doing business with the primary sanctioned entity). This forces countries like India to navigate a delicate balance between a crucial strategic partnership with the US (e.g., through ) and its historical, multifaceted ties with Russia, particularly in defense and energy. The lack of specific named countries in the act gives the US executive branch significant leverage, potentially using tariff threats as a negotiating tool in broader bilateral dialogues. For UPSC, expect questions on how India balances its traditional ties with Russia against its growing strategic convergence with the West, particularly in the context of the Ukraine conflict.
Economic
The potential imposition of 100% tariffs poses a significant risk to India's export competitiveness. The US is India's largest trading partner, and such tariffs would severely impact key export sectors like pharmaceuticals, textiles, and gems & jewelry. This highlights the concept of geoeconomics, where economic tools (tariffs, sanctions) are used to achieve geopolitical goals. Furthermore, the root cause—India's purchase of discounted Russian oil—is a classic example of prioritizing energy security (ensuring uninterrupted availability of energy sources at an affordable price). The discounted oil has helped India manage its current account deficit (CAD) and control domestic inflation by keeping fuel prices stable despite global volatility. The US action threatens this economic strategy, demonstrating the vulnerability of developing nations to the extraterritorial application of domestic laws by major powers.
Governance
From a governance perspective, this highlights the challenge of formulating policy in an environment of geopolitical uncertainty. The Indian government must engage in complex economic diplomacy to negotiate exemptions or mitigate the impact of the . This involves active lobbying, leveraging India's strategic importance to the US (e.g., as a counterweight to China), and clearly articulating India's economic compulsions. The situation also emphasizes the need for India to diversify its energy mix and supplier base to reduce reliance on any single source, thereby enhancing its resilience against external shocks. The discretionary power granted to the US President under this act (the ability to determine which top-five countries are targeted) introduces a high degree of unpredictability, complicating long-term economic planning and trade policy formulation in New Delhi.