A potential US-India trade deal could help protect India from a tariff of up to 100% under the new US legislation targeting major buyers of Russian oil and gas.

US President Donald Trump has signed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. The legislation authorises the US President to impose tariffs of up to 100% on countries that continue to purchase Russian oil and gas. India is among the major buyers covered by the measure.

According to sources familiar with the ongoing trade negotiations, a bilateral trade agreement could limit the impact of such tariffs. The legislation gives the US President authority to impose the tariff, but does not automatically enforce it.

The sources also said a trade agreement could provide protection from possible action under the ongoing US Section 301 investigation into excess capacity.

Trade Deal Remains Important

India and the US have been negotiating a trade agreement for several months. New Delhi has indicated that it wants better market access than competing economies such as Vietnam, Bangladesh and Indonesia before finalising the deal.

Sources said the US could adjust tariff arrangements through negotiations. They pointed to an earlier Section 301 forced-labour case, where India ultimately received a lower tariff rate than several competing countries.

India has also maintained that it will continue buying Russian oil because of its energy security needs. The country is among the largest buyers of Russian crude.

With the new sanctions legislation and other pending US trade actions, the timing of a US-India trade agreement has gained greater importance for Indian exporters and businesses.