Will India soon face 500 percent tariffs from the USA? That’s the question on everyone’s mind after U.S. Sen. Lindsey Graham said President Donald Trump has greenlit a bill that aims to impose 500 percent tariffs on countries that trade with Russia. It is important to understand that while China and India are the largest importers of Russian crude oil, only India has faced Trump’s wrath on this issue.Senator Lindsey Graham said he held a “very productive meeting” with Trump at the White House on Wednesday, during which the president approved the bipartisan Russia sanctions bill that has been discussed for several months.“This comes at the right time as Ukraine makes concessions for peace and Putin just talks and continues to kill innocents. “This bill will allow President Trump to punish those countries that buy cheap Russian oil and use it to fuel Putin’s war machine,” Graham said in a post on X on Wednesday.“This bill would give President Trump enormous leverage over countries like China, India and Brazil to persuade them to stop buying the cheap Russian oil that is funding Putin’s bloodbath against Ukraine,” he added.Graham said he hopes to get a “strong” bipartisan vote on the bill, perhaps as early as next week. So what will happen to the trade dynamics between India and the US if the bill is passed? According to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), a 500 percent tariff on goods – and possibly services via secondary measures – could effectively stop India’s $120 billion worth of US exports!
What is the 500% tariff bill?
Graham, along with Senator Richard Blumenthal, has introduced the Sanctioning Russia Act of 2025, which proposes secondary tariffs and sanctions against “countries that continue to finance Putin’s barbaric war in Ukraine.” The bill imposes a 500 percent tariff on secondary purchases and resales of Russian oil and was co-sponsored by nearly every member of the Senate Foreign Relations Committee.
500% Secondary Tariff Act
“President Trump and his team have taken a monumental step and implemented a new approach to end this bloodbath between Russia and Ukraine…The ultimate hammer in ending this war, however, will be tariffs against countries like China, India and Brazil that are propping up Putin’s war machine by buying cheap Russian oil and gas,” Graham and Blumenthal said in a joint statement last year.
Is India at risk of 500 percent US tariffs and what does that mean for trade?
Trump has already imposed tariffs of up to 50 percent on Indian goods, among the highest in the world, including a 25 percent component related to India’s purchases of Russian energy.Senator Lindsey Graham said Trump had approved the bill that would authorize the US Congress to impose tariffs of up to 500 percent on countries that continue to buy Russian oil.Although China and India account for the majority of Russian crude exports, recent U.S. trade measures only target India with punitive tariffs of 25%, a pattern that is widely expected to continue, according to GTRI. Although China is an important buyer, it has so far avoided punitive measures. U.S. officials fear Beijing’s retaliation could include restrictions on the supply of rare earth elements, which are crucial to American high-technology and defense production.“The same selective logic is likely to prevail in Senator Lindsey Graham’s proposed legislation. Even if the bill were approved by the Senate – a distant prospect – in practice it would only target India while leaving China out of reach,” says GTRI.So far, President Donald Trump has refrained from pursuing tariff measures through Congress, preferring instead to rely on presidential emergency powers under the International Emergency Economic Powers Act. However, the tariff strategy is currently facing legal challenges and a Supreme Court decision is likely soon. By contrast, the Graham proposal would have to pass the Senate, adding another layer of uncertainty to its prospects.Even if the bill becomes law, questions remain as to how a 500 percent tariff would actually be implemented, GTRI notes. While U.S. Customs has the authority to impose tariffs on physical goods, there is no legal framework for imposing tariffs on services. An escalation would therefore likely involve taxing US companies on payments for services sourced from India, the GTRI report said.The 50 percent tariff has already caused considerable damage. A 500% tariff would effectively bring India’s exports of goods and services to the United States, which currently total over $120 billion a year.“India must take a clear position on Russian oil imports and convey this decisively to Washington,” says Ajay Srivastava.“The broader contradiction is hard to ignore. U.S. lawmakers talk about “punishing” countries for buying Russian oil while Washington moves aggressively to seize Venezuela’s oil reserves. This is not a rules-based trading regime; it is worse than the law of the jungle because it is applied unevenly,” he adds.
