In a stunning development that has rattled global markets, President Donald Trump has officially “greenlit” a bipartisan bill titled the Sanctioning Russia Act of 2025. The proposed legislation threatens to impose a staggering 500% tariff on goods imported from countries that continue to purchase Russian oil, gas, and uranium.
This move places India directly in the crosshairs, along with China and Brazil, potentially jeopardizing the $120 billion India-US trade relationship.
The “500% Tariff” Bill: What We Know
The bill, introduced by Republican Senator Lindsey Graham and Democrat Richard Blumenthal, aims to completely cut off funding for Vladimir Putin’s war in Ukraine.
- The Core Rule: Any country that “knowingly engages” in the exchange of Russian-origin petroleum or uranium products will face a tariff of at least 500% on their exports to the US.
- Trump’s Approval: Senator Graham confirmed on X (formerly Twitter) that after a meeting on Wednesday, President Trump gave the go-ahead for the bill, stating it would give him “tremendous leverage.”
- Target Nations: Graham explicitly named India, China, and Brazil as the primary targets, aiming to force them to stop buying cheap Russian crude.
Why Is India Being Targeted?
Since the Ukraine war began, India has become one of the largest buyers of discounted Russian crude oil.
- India’s Stance: New Delhi has consistently maintained that its energy purchases are driven by domestic interest—providing affordable fuel to its 1.4 billion citizens—and that it stabilizes global oil prices.
- US View: The new US administration views these purchases as “funding Putin’s war machine.” Trump has reportedly expressed dissatisfaction with Prime Minister Modi regarding these purchases, stating, “He knew I was not happy.”
Economic Impact: A Potential Catastrophe?
If this bill passes the US Senate and becomes law, the consequences for the Indian economy could be severe.
- Trade at Risk: India exports over $120 billion worth of goods and services to the US annually. A 500% duty would effectively make Indian products (textiles, gems, pharmaceuticals, IT services) prohibitively expensive in the American market.
- Current Status: Indian exporters are already grappling with a 50% tariff imposed in August 2025. A jump to 500% would essentially shut down exports to the US.
- Market Reaction: The Indian stock market reacted negatively to the news, with the Nifty 50 falling by nearly 1% as investors panic over the future of IT and export-heavy sectors.
Will It Actually Happen?
While Trump has approved the bill in principle, it still faces legislative hurdles.
- Senate Vote: The bill is expected to go for a vote as early as next week. Given its bipartisan support (both Republicans and Democrats hate Russia’s war), it has a high chance of passing.
- Waiver Clause: The bill reportedly includes a provision allowing the US President to waive the tariff for 180 days if it is in the “national interest.” This suggests Trump might use the 500% figure as a negotiation tool (leverage) rather than an immediate tax.
What Happens Next?
- Diplomatic Talks: India’s new Ambassador to the US, Vinay Mohan Kwatra, has reportedly already met with Senator Graham to explain India’s position and seek relief from existing tariffs.
- Diversification: India may be forced to accelerate trade deals with the EU and other nations to reduce reliance on the US market if the threat materializes.
Frequently Asked Questions (FAQs)
Q1. What is the 500% tariff threat on India?
It is a proposal under the “Sanctioning Russia Act of 2025” that would impose a 500% tax on goods from countries (like India) that buy Russian oil. President Trump has supported this bill.
Q2. Why does the US want to impose such a high tariff?
The US wants to stop countries from buying Russian oil, which they believe funds Russia’swar against Ukraine. They believe hitting buyers with high tariffs will force them to stop these purchases.
Q3. Will this tariff apply to all Indian goods?
If enacted, the bill allows the US President to apply the tariff on “all goods and services.” However, exemptions might be made for critical sectors like pharmaceuticals or semiconductors, though nothing is guaranteed yet.
Q4. Has the bill been passed?
Not yet. President Trump has “greenlit” it, meaning he supports it. It still needs to be voted on and passed by the US Senate, likely next week.
Q5. How has the Indian market reacted?
The Indian stock market (Sensex and Nifty) fell sharply after the news, with export-oriented sectors like IT and Textiles facing the most pressure.