Key Takeaways

• US House passes bill allowing 100% tariffs on nations buying Russian energy.
• India relies heavily on Russian crude for energy security and affordable prices.
• US tariffs on India could severely impact exports and trade relations significantly.
• Indian officials monitor developments while defending energy purchase strategies.

The US House of Representatives recently approved legislation that empowers President Donald Trump to impose sanctions on Russia and levy tariffs of up to 100% on countries purchasing Russian oil and gas. This legislative move poses a significant geopolitical risk for major buyers like India, which has utilized discounted Russian crude to secure energy for its large population. The bill, now awaiting presidential signature, marks a sharp escalation in economic pressure regarding global energy flows and trade agreements.

The legislation represents a blunt instrument of economic coercion aimed at pressuring nations to alter their energy procurement strategies. Democratic Senator Richard Blumenthal explicitly warned countries like China and India to find alternative energy sources, stating they must buy oil and gas elsewhere. While countries typically have 180 days to adjust their import policies or negotiate with Washington, the President retains the authority to shorten this deadline, creating immediate uncertainty for global energy markets and trade partners.

India has long benefited from the displacement of Russian crude from Western markets following the invasion of Ukraine. Between December 2022 and August 2026, Russia supplied 37% of its crude exports to India, compared to 50% for China, according to the Centre for Research on Energy and Clean Air (CREA). In fiscal 2026, Russia accounted for 30.3% of India's total crude imports, valued at $40.8bn out of a $134.7bn total bill. During July alone, Russian crude constituted more than half of India's imports, overshadowing suppliers like the UAE, Saudi Arabia, and the US.

However, the economic landscape for Russian oil is shifting. The steep discounts that initially made Russian barrels highly attractive to Indian refiners have diminished. Concurrently, competition for these barrels has intensified, and the associated risks regarding shipping, insurance, and sanctions have risen. Despite these changing economics, Indian refiners continue to process this crude, which is then refined into fuels for export. This dynamic is particularly notable as Ukrainian strikes on Russian refineries have forced Russia to import fuel, with India supplying roughly 70% of these imports in August.

The potential imposition of Russia oil sanctions via tariffs presents a complex challenge for Delhi. India imports over 88% of its crude oil, with more than 85% sourced from just six countries, many located in conflict-prone regions. The infrastructure of its refineries is not always equipped to switch easily between different crude grades, making rapid diversification difficult. Furthermore, India’s strategic petroleum reserves are limited to only 9-10 days of net imports, compared to roughly 200 days in Japan, highlighting a significant vulnerability in its energy security framework.

Ajay Srivastava, a former Indian trade official and head of the Global Trade Research Initiative (GTRI), argues that the US bill is an attempt to force India into one-sided bilateral trade agreements. He emphasizes that India purchases Russian oil to secure affordable energy for 1.4 billion people, not to finance war, and that these purchases have helped stabilize global supplies and prices. India’s government has stated it remains firmly committed to energy security and is monitoring developments closely, noting that these implications have been clearly articulated to US interlocutors at high levels.

The threat of US tariffs on India extends beyond the energy sector, impacting the broader trade relationship. The US imported approximately $104bn of goods from India in 2025, with two-way trade in goods and services reaching roughly $240bn. Key Indian exports to the US include electrical equipment, pharmaceuticals, machinery, jewelry, chemicals, and textiles. A 100% tariff would directly affect Indian exporters, the value of the rupee, refinery margins, and the overall trade balance, creating substantial economic pressure during sensitive trade negotiations.

Michael Kugelman, a senior fellow at the Atlantic Council, notes that while India has built some insulation through trade deals with the EU and strengthened partnerships with China, a 100% tariff from a critical export destination is severe news. He points out that China possesses greater leverage over the global economy due to its dominance in critical supply chains, whereas India lacks comparable leverage. The Trump administration may perceive greater risk in retaliatory measures from China than from India, influencing the strategic calculation behind the tariff threats.

The situation forces an uncomfortable calculation for Delhi regarding the cost of Russian crude versus the risk to US exports. The final impact will depend on the remaining discount on Russian oil, global crude prices, freight and insurance costs, and whether Washington offers exemptions or reaches a broader settlement. As the bill moves to the President for signature, both nations must navigate the delicate balance between energy security imperatives and the preservation of critical bilateral trade relationships.

India Navigates Energy Security Amid Trade Threats

India faces a critical juncture where energy affordability clashes with trade stability. The potential imposition of heavy tariffs could force a strategic pivot toward more expensive alternative suppliers, increasing costs for consumers and industries. If exemptions are not granted, Indian refiners may face margin compression, while exporters could lose competitiveness in the US market. Long-term implications suggest India may need to diversify its crude sources more aggressively, despite higher logistical costs, to mitigate future geopolitical risks and ensure resilient energy supply chains.