Trump’s nod to Bill threatening 500% tariff on India, China spooks markets

US Senator Lindsey Graham
| Photo Credit:
AMMAR AWAD

US Senator Lindsey Graham’s declaration that President Donald Trump has “greenlit” a Russia Sanctions Bill, which threatens 500 per cent tariffs on countries buying Russian energy, including India, China, and Brazil, spooked markets on Thursday, sending benchmark indices to their steepest fall in over four months.

The Bill, which has bipartisan support and is expected to be voted in the US Congress as early as next week, dims India’s hopes of clinching a trade deal with the US unless the Supreme Court strikes down Trump’s tariffs. A ruling on the legality of Trump’s tariffs, imposed invoking economic emergency powers, is expected on Friday.

Sanctions Bill

The Russia Sanctions Bill says, “the President must increase the rate of duty on all goods and services imported into the US from countries that knowingly engage in the exchange of Russian-origin uranium and petroleum products to at least 500 per cent.” The Bill has thus far got 84 co-sponsors (of a total of 100 Senate members), and 151 co-sponsors in the US House of Representatives, suggesting it will be passed.

Lindsey, who piloted the Bill, said on X: “This Bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivise them to stop buying the cheap Russian oil…”

Stocks tumble

The development spooked the markets that tumbled sharply on Thursday, with the Nifty 50 breaching the crucial 26,000 level as investor sentiment weakened following reports of Trump approving the legislation.

The benchmarks recorded their steepest fall in over four months, with the BSE Sensex closing 780.18 points or 0.92 per cent lower at 84,180.96, while the Nifty 50 shed 263.90 points or 1.01 per cent to settle at 25,876.85, marking its fourth consecutive negative close.

Deal prospects

Simultaneously, exporters told businessline while they are still hopeful about a trade deal with the US, their biggest market, they are increasingly diversifying into new markets, leveraging existing FTA partnerships. Washington has already imposed 50 per cent tariffs on most Indian exports in August-end, of which 25 per cent is penalty for Russian oil purchase.

“Up to a point the tariffs matter. After that they don’t. Exporters are already exploring new markets. The US Supreme Court’s verdict on the tariffs will be crucial,” said Pankaj Chadha, Chairman, EEPC India.

It is not clear how the 500 per cent tariff will be levied, pointed out Ajay Srivastava from Global Trade Research Initiative. “US can levy tariffs on goods, but there is no legal mechanism to tariff services. Any escalation would likely focus on taxing US firms on payments for Indian services exports,” he said.

(With inputs from Mumbai bureau)

This Bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivise them to stop buying the cheap Russian oil…”Lindsey GrahamUS Senator

Published on January 8, 2026