At the same time, renewed US-Iran hostilities threatened to prolong disruptions to shipping routes and energy supplies. Pressures to reduce Russian oil purchases may increase just when alternative supplies could become costlier or less secure.
The proposed US Sanctioning Russia Act bears the imprint of the late Senator Lindsey Graham, who had earlier advocated tariffs as high as 500 per cent. The revised bill would empower the President to impose tariffs of up to 100 per cent on the five largest purchasers of Russian energy, while permitting selective waivers. India and China are obvious targets.
That discretion leaves room for diplomacy but also permits the tariff threat to become a source of leverage in trade negotiations unrelated to Russia. India is already seeking an interim trade agreement with the US, protection against fresh American levies and safeguards for sensitive farm products. The proposed law would add another coercive instrument to Washington’s trade arsenal.
Meanwhile, the US action against Brazil shows the range of such instruments. Invoking Section 301 of the Trade Act, the Trump administration imposed an additional 25 per cent tariff on many Brazilian goods. Its allegations extended beyond border barriers to Brazil’s PIX payment system, digital regulation, preferential tariffs, intellectual-property enforcement, anti-corruption measures, and illegal deforestation.
The message for India is clear: Domestic regulation, payment systems, environmental policies and market-access disputes can all be converted into grounds for tariff action.
The US-Iran conflict escalated last week, but markets and governments were not taken by surprise. The disruptions of early March had already encouraged stock-building, alternative sourcing and contingency planning. Oil and freight costs rose, but the response was more measured than during the initial shock.
India has diversified crude supplies across Russia, the Gulf, the United States, Latin America and Africa. That provides flexibility, but not immunity. Replacing Russian barrels abruptly could still raise procurement and freight costs and add to inflationary pressures. The threat at Bab el-Mandeb, the southern entrance to the Red Sea, must also be viewed realistically. Major container lines have largely avoided the Red Sea route since December 2023, routing principal services around Africa, although some had begun returning cautiously. A fresh Houthi escalation could intensify an existing disruption rather than create an entirely new one. It could keep vessel capacity tied up on longer routes and sustain elevated freight and insurance costs.
The government has already provided targeted insurance and credit support to exporters. Any additional relief should therefore be confined to exporters facing demonstrable increases in freight and insurance costs.
The immediate priority must be diplomacy. Public statements should remain measured, while back-channel engagement reaches the White House, congressional leaders and influential business constituencies. India should explain that punitive tariffs would disrupt supply chains, raise costs for US importers and complicate ongoing trade negotiations without materially influencing Moscow’s conduct.
India cannot determine what Congress enacts or how West Asian hostilities unfold. India’s best defence is to buy time, preserve its choices, and use discreet diplomacy to ensure that the US pressure over Russian oil does not combine with West Asian disruption to produce a wider trade and energy shock.
Email: tncrajagopalan@gmail.com
 "Oil Tanker (Bloomberg)")