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On September 16, the US Congress appointed Lindsay O. The Graham Sanctioning Rasha and Iran Act was passed by 159 votes to 262.
The US Senate had passed this bill with an overwhelming majority on August 7. President Donald Trump has also signed it and this bill has become law.
Now Trump has got the right to impose 100 percent tariff on India.
After the bill was passed, Democratic Party MP Richard Blumenthal had publicly said that China and India should improve their attitude and buy oil and gas "from somewhere else".
This law gives Trump wide latitude to decide when and how to use these tariffs. It is not yet clear when or if he will impose tariffs that increase the cost of American imports of Indian goods.
This law is being seen as a threat to India. This could increase Trump's pressure effect, especially at a time when he is also exploring the possibility of trade agreements with Russia.
By August 2026, India was the second largest buyer of Russian oil after China. In such a situation, the possible American tariffs may have the biggest impact on these two Asian countries.
Increasing pressure regarding Russian oil
Between December 2022 and August 2026, China's share in Russia's total crude oil exports was 50 percent while India's share was 37 percent.
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India's Foreign Ministry immediately issued a statement after the bill was passed. The ministry said it has raised the issue with the US and stressed that it could impact not only bilateral relations but also the international energy market.
According to the latest data for July 2026, Russia's share in India's crude oil imports was more than 51 percent. At a time when the movement of oil through the Strait of Hormuz is disrupted, it may be difficult for India to reduce its dependence on Russian oil on a large scale within 30 days.
Both situations are difficult for India. If India continues to buy large quantities of oil from Russia, it may have to bear the burden of Trump's tariffs. The second situation is that if India cuts the import of Russian oil to avoid tariffs, then it will be seen as bowing to the pressure of America again and again.
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Apart from this, the movement of oil through the Strait of Hormuz is disrupted and the prices of crude oil are again above $100 per barrel, it may prove costly for India to find new sources of oil.
If America imposes 100 percent tariff on Indian goods, it will be a big blow. This will almost double the cost of Indian imports into the US and many products will no longer be commercially competitive.
The immediate burden will fall primarily on Indian exporters and their employees, but US importers, retailers and consumers may also face higher prices or limited choices.
If America increases the tariff, it is recovered from American importers but in practice it will have a direct impact on India's exports. India is already struggling with trade deficit.
If an American importer buys $20 worth of cloth from India, a 100 percent tariff could result in an additional $20 duty at the border.
After this, domestic transportation, retail margin and other taxes will also be added. If the same product can be bought from another country at a much lower tariff, there will be no reason to buy expensive goods from India.
What should India do?
Ajay Srivastava, director of Delhi-based think tank Global Trade Research Initiative (GTRI), says that India could demand huge cuts in purchases of Russian oil and concessions under an unequal bilateral trade agreement.
Ajay Srivastava says, "India should not compromise its energy security in exchange for temporary tariff relief. Neither signing trade agreements nor stopping purchases of Russian oil. The US has imposed new tariffs despite having trade agreements with key partners like the European Union, Japan and South Korea. Therefore, India should not allow threats of American tariffs to become the basis for deciding its energy policy.
Subsidized Russian crude has helped reduce India's oil import bill, strengthen energy security and keep inflation under control. Ajay Srivastava says that so long as Russian oil remains commercially competitive, India should continue to buy it and negotiate strongly without giving unilateral trade concessions.
India is among the fastest growing large economies of the world. According to official data, India's GDP growth in the first quarter of this financial year was 7.8 percent.
Prime Minister Narendra Modi has set a target of making the country a developed nation by 2047, i.e. by the completion of 100 years of India's independence from Britain.
Economic analysts believe that to achieve this goal, India will have to register an average economic growth of 7.8 percent annually for the next two decades. But Trump's policy can affect India's economic growth.
America is India's largest export market. According to official data, Indian companies exported goods worth $87 billion to America in the last financial year. This was about 20 percent of India's total exports of $438 billion.
It is also said that India has relatively less exposure to tariff disruption compared to its Asian rivals, because India's domestic market is very large. India is called an import based economy.
Trump's tariffs and growing closeness with Pakistan have weakened India's confidence in the US as a reliable strategic partner.
India imports more than 90 percent of its crude oil consumption and its dependence on Russia has once again increased as the war in Iran has affected oil supplies from the Middle East.
According to global maritime data company Kpler, Russian crude oil accounted for almost half of India's total crude oil imports this summer.
China buys more Russian oil than India and that too comes under the purview of this new law. In India, it remains to be seen whether America puts pressure on China like New Delhi does.
This question is important because India has strengthened its relations with America in the last several years, one reason for which has been to balance China's influence.
Can anyone replace America?
India is trying to reduce the dependence of its trade on America. The Free Trade Agreement is being seen in this manner. However they may not find an alternative to the US market overnight.
The India-UK Comprehensive Economic and Trade Agreement came into force on 15 July 2026. Under this, Britain gets duty-free access to about 99 percent of India's exports.
India-Oman trade agreement has also come into force. Under this, Oman has given zero-duty access on 98.08 percent of its tariff lines.
The India-New Zealand FTA provides for zero-duty access to all Indian exports once implemented and is likely to come into effect from October 20. At the same time, negotiations on India-European Union FTA were completed in January. It has a provision for preferential access on 96.8 percent of tariff lines, which covers 99.5 percent of India's exports.
These agreements cannot replace the American market. But they can lower the cost of entry into other big markets.
Tariff concessions alone will not ensure access to these markets. Indian exporters will have to invest in logistics, meet technical and product standards, make changes in their designs and create distribution networks. It is these capabilities that helped them make their place in the American market.
Ajay Srivastava says, “There is a limit to diversifying export markets. If a company reduces its 60 percent dependence on America to 60 percent dependence on Europe, then it has diversified geographically, but not strategically. Along with diversification of markets, the customer base will also have to be broadened.
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