Kazim AlamIn a move to choke Russia’s economy, the US Senate is pushing a bill that could slap tariffs as high as 500 percent on goods from countries that continue to trade with Moscow.
The Sanctioning Russia Act of 2025 has won strong bipartisan support, with over 80 of the 100 US senators backing it. The objective of the legislation is to force Russia to end its war with Ukraine by punishing nations that buy Moscow’s oil, gas, or uranium.
US Senator Lindsey Graham, sponsor of the bill, has called it the "economic bunker buster" against countries that buy Russian energy products.
If passed in its current form, the legislation will hit major economies such as China, India, and the European Union, sparking economic chaos and straining global ties.
“This legislative initiative, if implemented, would have a drastic economic impact on quite a number of countries,” Louis Kuijs, chief economist for Asia-Pacific at S&P Global tells TRT World.
Since taking office five months ago, President Donald Trump has wielded tariffs like a club, targeting adversaries and allies alike to bend them to US demands. But the latest proposal could be his most explosive yet, with the potential to upend global trade altogether.
‘A bone-crushing bill’
China and India, which together buy 85 percent of Russia’s crude oil, will face devastating consequences if their exports to the US are subjected to a tariff of 500 percent.
China, the world’s second-largest economy, exports goods worth $525 billion to the US annually. A 500 percent tariff would make these products unaffordable, effectively slamming the door on Chinese exports.
India, meanwhile, exports nearly $81 billion in goods like machinery, precious metals and pharmaceuticals to the US.
“These countries will face pressure to negotiate deals with the US or find alternative partners,” Professor Surupa Gupta of the University of Mary Washington, Virginia, tells TRT World.
How Russia exports despite sanctions
Sanctions limit a country’s ability to trade with the outside world. Once sanctioned, a business or bank can’t make transactions in major currencies or use SWIFT, the mainstay of the global payments network that banks rely on to process cross-border trade.
Aimed at reducing Russia's ability to finance the war, the Western bloc sanctioned Moscow’s energy exports, which traditionally accounted for roughly 40 percent of annual government income.
But Russia seems to have successfully bypassed these trade barriers through the use of intermediaries, ‘shadow fleets’, and alternative payment systems.
After 2022, Russia resorted to using dark or shadow fleets to transport oil to buyers in China. The fleet consisted of 1,400 ships in 2024, mostly old vessels with no insurance and obscure ownership.
Russia has reportedly invested $10 billion in developing its shadow fleet to continue selling oil at market prices.
These vessels use flags of convenience from Gabon, Liberia, Malta, the Marshall Islands, and Panama – countries that are either less inclined or unable to enforce Western sanctions.
In exchange, Russia receives payments in the yuan as opposed to the dollar, ensuring that transactions remain out of bounds for sanctions enforcers.
As for India’s oil purchases from Russia, New Delhi relies on a select few banks to circumvent US sanctions.
In 2022, India’s central bank allowed a handful of banks to open special accounts to facilitate rupee-based trade with Russia. These banks do not have any presence in the West and are “not really worried” about coming under secondary sanctions.
In the crosshairs: European allies of the US
The bill doesn’t spare America’s European allies. The European Union, despite slashing its reliance on Russian energy, still imports gas from Moscow to keep homes heated and factories running.
Under the existing sanctions regime, companies operating in European and G7 nations are not allowed to provide shipping and insurance services for Russian crude oil trade unless the transaction is verifiably below the price cap of $60 a barrel.
This is aimed at limiting Russia’s income from energy sales while ensuring a steady flow of gas into the European market.
“The cost will be unacceptably high for the US and its trading partners,” Gupta says, suggesting the proposed US tariffs are more about pressuring Russia to negotiate peace than punishing allies.
Bad news for US consumers
The bill’s sky-high tariffs will make imported goods like Chinese gadgets and Indian medicines pricier for American consumers.
US businesses that rely on global supply chains will also see higher costs. Kuijs of S&P Global expresses doubt that the bill will become a law in its existing state because it will be “politically untenable”.
He pointed out that Trump’s plan for imposing a 145 percent tariff on Chinese goods hurt US farmers and consumers, forcing Washington to scale it back.
“The much higher tariffs proposed here would lead to a much larger negative impact in the US,” Kuijs says.
A nudge away from the dollar?
The bill could reshape global trade, splitting the world into rival economic camps. China and India are already conducting dollar-free deals with Russia.
Members of BRICS – a 10-country group of emerging economies – are pitching their own payment systems to reduce the outsized role of the dollar in international trade.
The tariffs would shut out most of global trade with the US and create small blocs of countries interested in trading with each other, Gupta says.
A tool for extracting concessions?
The US Senate will likely pass the bill soon. But it will need approval from the US House of Representatives, controlled by Trump’s Republican Party, as well as the president’s final signature.
Keen on dealmaking, Trump may use the bill as leverage to gain concessions from Russia, China, or even allies like the EU. The condition of a presidential waiver in the proposed legislation will let him exempt any country from the law.
“The fewer alternatives a trading partner has, the more likely that they will try to negotiate a lower tariff or other concessions or exceptions with the US,” says Gupta.
