The US has backed away from threatening to impose new tariffs on major buyers of Russian oil. It has given India a big relief. If these tariffs are implemented, the price of India’s exports to the US market may increase significantly. On October 16, US President Donald Trump issued an executive order. Under this ‘Lindsay O. Lindsey O. Under the Graham Sectioning Russia and Iran Act of 2026, certain tariffs, restrictions, and embargoes are removed.

The decision comes days before Oct. 18 — the date when a 100 percent tariff could be imposed on new purchases of Russian oil and gas under the law. This development is a new twist in the policy which started with the proposal of 500 percent tariff. Later it was changed to a 100 percent tariff structure, and now it has been temporarily stopped by a Presidential Order (amnesty).

500% to 100%

In an early version of the proposal, Graham called for tariffs of up to 500 percent on countries buying Russian oil and other energy products. It was intended to put pressure on Moscow to make it more expensive for countries that continue to buy Russian energy to do business with America.

The law that was finally passed provided for a 100 percent tariff. This will apply to the five largest buyers of crude oil and natural gas from Russia, if they knowingly make such new purchases on or after October 18. In addition, there was also a separate provision for people or entities who help evade the sanctions imposed on Russia.

Although it went into effect on September 18, 2026, the act does not automatically impose tariffs on every country that buys Russian oil. Its implementation was based on the terms of the law and the decisions of the President.

On October 16, Trump waived the imposition of certain tariffs and sanctions, including a 100 percent tariff provision. The order also mentions a 500 percent duty on goods of Russian origin, a departure from an earlier proposal to punish countries that buy Russian energy.

Why was India at risk of high tariffs?

The reason for India’s weakness was its purchase of large quantities of crude oil from Russia and its export to America. After Russia invaded Ukraine in February 2022, India increased its oil purchases from Russia at concessional rates, making Russia the main oil supplier to Indian refineries.

According to ‘Kpler’, India imported about 1.74 million barrels of crude oil per day from Russia in September 2026. That was down from August’s figure of around 2.1 million barrels per day. This estimate for September was based on data up to September 27, not the final figures for the entire month. Despite this, Russia remained the largest supplier of crude oil to India.

India depends on imports for more than 90 percent of its crude oil requirements, so getting cheap and reliable supplies from abroad is crucial for energy security. However, Washington argued that money from buying energy from Russia helped finance Russia’s war against Ukraine.

Imposing a 100 percent additional duty on Indian exports could significantly reduce the competitiveness of Indian products in the US market, threatening orders, businesses and jobs. Therefore, India faced a difficult challenge – striking a balance between securing affordable energy and maintaining access to a large export market.

India has faced such threat of tariffs before

This latest development follows earlier oil sanctions related to Russia. On August 6, 2025, Trump ordered an additional 25 percent tariff on Indian imports, citing India’s direct or indirect purchases of oil from Russia. It came into effect on August 27, raising the total duty on many Indian goods to 50 percent.

In February 2026, as part of a comprehensive trade agreement between the US and India, Trump announced the removal of 25 percent additional tariffs. The US counter tariff on Indian goods was also reduced from 25 percent to 18 percent. The change was linked to India’s promise to stop buying Russian oil.

The White House said India plans to buy more than $500 billion worth of energy, technology, agricultural products and other goods from the US. This was only an intention and not proof that the entire amount was purchased. Both countries have also committed to negotiating a comprehensive bilateral trade agreement.

The two countries are working on the first phase of a bilateral trade agreement. However, changes in the US tariff structure have necessitated some adjustments to the agreement signed in February.

What does this exemption mean for exporters?

The October order removed some of the duties imposed under the Graham Act with immediate effect, but it did not eliminate all US tariffs on Indian goods, nor did it alter the February trade framework.

India has received some relief, but not permanent immunity from future American action. The Graham Act is still in effect, which means the Trump administration has the option to reconsider the exemption.

An official associated with the Indian export sector, requesting anonymity, told the Money Control report that this is a status quo. Presently the tariff situation is same as before. Currently, under ‘Section 301’ related to forced labour, the US A 10 percent tariff is imposed on most goods leaving India.

Trump’s Russian diesel deal was signed a week ago

It is important to note the timing of these discounts. On October 9, Trump announced an agreement with Russian President Vladimir Putin under which Russia would supply more than 300,000 tons of diesel to the US and global markets. The US Treasury also issued a temporary license easing restrictions on Russian diesel sales and transactions.

The agreement was introduced as a measure to increase fuel supply and lower prices. But this raised questions about the contradictions in Washington’s policy. On the one hand, the administration was preparing to punish countries that bought energy from Russia, while on the other hand, it was making it easier for itself to sell Russian diesel on international markets (including the US). This development does not prove that the concession was made because of the diesel contract, but it helps to understand the context behind the decision.

Why did Washington retreat?

Ajay Srivastava of the Global Trade Research Initiative (GTRI) says there could be several reasons behind this exemption. This concession comes less than a month after the ‘Graham Act’ became law.

Srivastava said that under the October 9 agreement with Russia, the US had decided to buy Russian diesel to alleviate domestic fuel shortages and high prices. In such a situation, if the US buys Russian energy itself and at the same time punishes other countries that do so, it could be accused of adopting ‘double standards’. He also referred to Washington’s accord with China, under which the US agreed not to raise tariffs on China until January 10.

He further said that America itself is out of this scope and China also has security, in such a situation targeting India alone can derail the ongoing bilateral trade talks between the two countries. Trump’s executive order formally cited US national interests and allowed officials to monitor energy purchases from Russia.