US Tariffs: Is India’s America Bet Over?

The US Senate’s passage of the Lindsey Graham Sanctioning Russia and Iran Act has opened a potentially damaging new chapter in the India-US relationship.

Passed 86-11, the bill would give President Donald Trump authority to impose tariffs of up to 100% on countries among the largest buyers of Russian oil and gas. India is one of the five countries covered, alongside China, Azerbaijan, Hungary and Slovakia.

The bill still has to clear the House, and a 100% tariff is not automatic. But the threat itself has already changed the political calculation in New Delhi.

The issue is larger than Russian oil. It raises a fundamental question about the limits of the India-US partnership: how much room does Washington really allow India to pursue an independent foreign and energy policy when American interests are at stake?

India’s case is straightforward. After Russia invaded Ukraine, Indian refiners sharply increased purchases of Russian crude because it was discounted and helped contain the cost of energy for an economy that imports most of its oil.

Russian crude subsequently became a major part of India’s energy mix, accounting for more than half of imports in July.

Washington’s argument is equally clear: buying Russian energy provides Moscow with revenue that helps sustain its war effort. But New Delhi sees the sanctions differently. India is not buying Russian oil to support Russia’s war; it is buying a globally traded commodity at a competitive price to protect its own economy.

That is why the charge of Western double standards has gained traction.

Indian officials and analysts have pointed out that the United States and Europe continue to import important Russian commodities, including uranium, palladium and fertilisers.

Indian equity strategist Harsh Gupta Madhusudan has called the measure effectively an “anti-India bill”, arguing that Western countries themselves continue to trade with Russia.

The political optics are difficult to ignore. If European energy security can be accommodated through exemptions and transition arrangements, India is asking why its own energy security should be treated as evidence of non-compliance.

The economic consequences could be substantial.

The immediate exposure is India’s export sector. A punitive US tariff would hit industries such as textiles, carpets, furniture, stone products and pharmaceuticals, many of which are employment-intensive and particularly dependent on access to the American market. The supplied analysis estimates that more than 32,000 Indian suppliers could be exposed to disruption.

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There is also a less visible risk. India has spent years positioning itself as a China-plus-one manufacturing destination. If companies now believe that production in India could be undermined by sudden changes in US trade policy, some investment may simply move elsewhere. The damage would then come not only from lost exports but from investment that never arrives.

Energy is the bigger vulnerability. India’s alternatives to Russian crude exist, but replacing large volumes quickly will come at a price. Conservative estimates (projections from Sachin Gupta and CareEdge Ratings)  indicate that shifting half of Russian purchases to alternative suppliers could add about $2.1 billion annually to India’s import bill; a complete shift could cost roughly $4.2 billion under its assumptions.

Those are scenarios, not forecasts, and the eventual cost would depend on global prices, shipping and supplier discounts.

But the underlying problem is clear. If India and China simultaneously reduce Russian purchases while supplies through the Strait of Hormuz remain constrained, global oil prices could rise sharply.

The analysis estimates that crude could reach $110-$120 a barrel, putting considerable pressure on India’s current account, inflation and the rupee. That would turn a US policy designed to squeeze Russia into an economic shock for India.

Politically, this puts New Delhi in a difficult position.

The United States is India’s largest export market and an increasingly important source of technology, investment and defence cooperation. Yet Russia remains important to India’s energy security and defence ecosystem. Abandoning Moscow under American pressure would weaken one relationship without necessarily guaranteeing the benefits of the other.

For Washington, there is a similar contradiction. India is central to the US effort to balance China’s growing power in the Indo-Pacific. Defence cooperation has expanded, the Quad has become an important diplomatic framework and the two countries increasingly cooperate on technology, maritime security and supply chains.

A policy that forces India to choose between Russian energy and the American market risks weakening some of the strategic convergence Washington itself has spent two decades building.

India therefore has several options, but none is painless.

The first is negotiation. Since the 100% tariff remains a presidential power rather than an automatic penalty, New Delhi has an incentive to seek exemptions, waivers or a transition period rather than immediately escalate.

The second is diversification: more energy suppliers, more export markets and more flexible refining capacity. Europe, the Gulf, Africa, Southeast Asia, Japan and Australia become increasingly important in a strategy designed to ensure that no single market or supplier can exercise overwhelming leverage over India.

The third is technological resilience. India does have potential leverage over American technology companies because of the size of its consumer market. But using Big Tech as a weapon would be risky because India’s own digital economy remains heavily dependent on American software, cloud infrastructure and operating systems.

The smarter approach is to reduce that dependence first, particularly in cloud infrastructure, semiconductors, critical software and payment systems.

So has the India-US strategic partnership run out of road?

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🇮🇳🇺🇸⚡️US ‘sanctions from hell’ on India and China will raise hell for Americans

Imposing 100% tariffs on all goods from China and India is “the economic equivalent of shooting yourself in the foot,” said US Senator Rand Paul. https://t.co/xw4RQKfQG0 pic.twitter.com/CqqAVXv43F

— War Flash (@WarFlash_2630) August 8, 2026

Not yet. The two countries still share major interests, particularly regarding China, the Indo-Pacific, defence technology and maritime security. Neither has an obvious interest in dismantling the relationship.

But an important assumption underlying the partnership has been badly damaged: the belief that strategic convergence would steadily overcome differences on issues such as Russia.

For two decades, the relationship worked because both sides accepted limits. India moved closer to Washington without abandoning Moscow; the United States deepened cooperation with India without demanding that New Delhi become an American ally.

The sanctions bill tests whether that bargain still holds.

If Washington increasingly treats access to the US market as leverage to dictate India’s energy choices, New Delhi will have greater reason to diversify its trade, defence and technology relationships.

That would not make India anti-American. It would make India more determined to ensure that its relationship with America remains a choice rather than a dependency.

The answer for India, therefore, is neither to abandon Washington nor to simply absorb American pressure.

It is to reduce the vulnerabilities that make such pressure effective: diversify energy supplies, expand export markets, build domestic technological capacity and retain enough economic flexibility to maintain relations with both Washington and Moscow.

The India-US partnership is not dead. But the era in which its trajectory was assumed to be inevitably closer and deeper may be ending. What emerges next will be a harder relationship, based less on sentiment or assumptions of convergence and more on bargaining between two countries that remain partners, but increasingly insist on defining their own interests.