Global trade in 2026 and India’s role: US Russia sanctions bill adds tariff risk

Global trade in 2026 and India’s role has taken a dramatic turn following the recent bipartisan approval in the United States of a sanctions bill aimed at penalising major purchasers of Russian energy, including India. The proposed Sanctioning Russia Act of 2025 — which has received backing from President Donald Trump to advance in Congress — could impose punitive tariffs of up to 500% on countries that continue to buy Russian oil, gas and other energy products.

This development adds a new dimension to global commerce and geopolitics only weeks into 2026, intensifying economic pressure on trading partners who have not fully aligned with Western sanctions over the Russia-Ukraine war. For India — which remains one of the world’s largest energy importers and exporters of goods — the sanctions proposal poses fresh challenges in international trade, energy security, and diplomatic negotiations. This article examines the bill’s implications, recent trade data, sectoral impact, and strategic responses shaping the global trade outlook.

What is the US Sanctioning Russia Act of 2025?

The Sanctioning Russia Act is bipartisan legislation introduced in the United States Congress that would authorise secondary sanctions and punitive tariffs on countries that import energy from Russia and fail to negotiate conditions leading toward resolution of the Ukraine conflict. Under its provisions:

• Tariffs up to 500% could be imposed on countries buying Russian oil, gas, uranium and related products.

• Asset freezes and visa bans could target Russian officials and entities involved in the war or those trading in sanctioned sectors.

• Penalties extend to financial institutions facilitating such energy trade.

The bill has garnered support from lawmakers including Republican Senator Lindsey Graham and Democratic Senator Richard Blumenthal, and is expected to reach a Senate vote in the coming days. President Trump’s public endorsement of the legislation indicates a strategic shift toward more aggressive trade diplomacy tied to energy dependencies.

India in the sanctions spotlight

India has been a major buyer of discounted Russian crude oil since the outbreak of the Ukraine war in early 2022, benefiting from price concessions amid global supply disruptions. However, this has placed New Delhi in a complex position relative to Washington’s evolving trade strategy.

Recent oil import trends

According to Reuters reporting, India’s imports of Russian crude have declined sharply, with key refiners such as Reliance Industries reporting no expected deliveries in January 2026. The fall in volumes follows heightened Western pressure and earlier sanctions regimes. This shift suggests that India is already rebalancing energy sources under external diplomatic pressure.

Oil imports trend table (2023–2026)

Compiled from recent Reuters estimates and energy analytics.

This decline reflects not only geopolitical pressure but also India’s efforts to diversify its energy mix. Nevertheless, any further escalation — such as implementation of 500% tariffs — could intensify these trade pressures.

Ripple effects on Indian exports

High tariffs already in place

India is already facing expensive trade friction with the United States following the imposition of a 50% tariff on many Indian goods, a move linked in part to tensions over energy purchases and other geopolitical issues.

If the proposed Sanctioning Russia Act becomes law, export sectors could be exposed to even larger costs, especially if punitive tariffs are applied to countries continuing to trade with Russian energy. Listed below are some of the key risks:

• Reduced market access to the United States for labour-intensive sectors

• Increased cost competitiveness challenges

• Potential supply-chain disruptions as tariffs ripple through intermediate goods markets

Export exposure table (2025 data)

Sector figures are based on trade estimates from recent Indian Express and export reports.

Commodity markets and secondary sanctions

The secondary sanctions component of the bill goes beyond tariffs. It would authorise measures against financial entities and intermediaries that facilitate trade in sanctioned commodities, particularly Russian energy and related products.

This could have broader implications for global trade settlements and currency practices. For example, India and other nations have explored settlements using local currencies — such as the rupee–ruble trade mechanism — to mitigate dependence on the US dollar and avoid financial system restrictions.

Diplomatic and strategic context

United States

For the United States, the bill is aimed at applying economic pressure not only on Russia but also on its major trading partners in Asia. Lawmakers have framed this as a way to choke off revenue contributing to Russia’s “war machine” in Ukraine, especially from oil exports.

However, such measures also risk straining relationships with key partners such as India, which is simultaneously a strategic defence and economic partner for the U.S.

India

Indian officials have reiterated that trade and energy policy decisions are guided by national interest and energy security imperatives, particularly for a population of 1.4 billion people. Officials maintain that reductions in Russian energy purchases are a strategic choice rather than coercion.

India’s Ministry of External Affairs has also noted its continuing interest in concluding a balanced trade deal with the United States, emphasising mutual benefit and ongoing dialogue.

Graph: Potential tariff escalation scenarios

This simple bar comparison highlights the gulf between the current 50% tariffs and the possible 500% sanctions tariff under the new bill.

Trade diversification and risk mitigation

Faced with escalating tariff risks, Indian exporters and policymakers are actively reassessing trade strategies. Key components of mitigation include:

• Diversification of markets: Expanding exports to Europe, Africa, Latin America, and Asia beyond the U.S. market

• Value-addition: Enhancing product quality and moving up the export value chain

• FTAs and regional partnerships: Negotiating or upgrading free trade agreements to secure preferential access and reduce tariff burdens

These strategic responses are designed to buffer the impact of unilateral sanctions and create more resilient trade linkages.

India–US trade talks amid sanctions tensions

Despite tariff and sanctions pressures, India and the United States remain engaged in negotiations for a bilateral trade agreement. Recent reports indicate disagreements over modalities and political signalling — including public comments from U.S. Commerce Secretary Howard Lutnick about stalled negotiations — but New Delhi continues to assert that talks are “very much alive.”

Broader implications for global trade in 2026

The emerging tariff environment and sanctions landscape underline a broader trend in global trade in 2026: geopolitical considerations increasingly shape commercial policy. Nations are recalibrating traditional trade patterns to balance economic growth, strategic autonomy, and diplomatic alignments.

Key implications for global commerce include:

• Heightened tariff uncertainty affecting investment and production planning

• Supply-chain realignment prioritising regional hubs and diversified partners

• Energy market volatility driven by sanctions and alternative sourcing strategies

These dynamics suggest that 2026 could see both increased fragmentation and new forms of cooperative trade frameworks as countries adapt to the shifting policy terrain.

What comes next

The Sanctioning Russia Act must still be passed by both houses of Congress and signed into law before it becomes binding. However, Trump’s public approval of the bill’s advancement signals a willingness to use tariff policy as a geopolitical lever.

For India, major outcomes to monitor include:

• Whether punitive tariffs are implemented and how they are applied

• Further shifts in Russian oil import patterns

• Progress in India–US trade negotiations

• Export flows to key markets and diversification progress

The coming months will determine not only the immediate economic impact but also the trajectory of India’s trade strategy in a world where geopolitics and commerce are increasingly intertwined.