Trump gains a tariff weapon against China and India. Will he use it?

President Donald Trump can now impose tariffs of up to 100% on countries purchasing oil from Russia, putting China and India squarely in the crosshairs. 

The U.S. House on Wednesday passed a sweeping Russia sanctions bill, paving the way for Trump to tariff major purchasers of Russian energy. 

The move comes close on the heels of the BRICS Summit, where Russian President Vladimir Putin and leaders from the Global South, including China and India, condemned unilateral economic sanctions and secondary sanctions, without naming the U.S.

All five top purchasers of Russian energy will be “extremely worried” about the potential application of this bill, said Deborah Elms, head of trade policy at Hinrich Foundation. The new statutory authority could give Trump the power to “strike hard and quickly at any time for any reason.” 

China and India would be most exposed, as both have leaned heavily into discounted Russian crude since the Ukraine war broke out in 2022, while the Iran war has further squeezed energy supplies. Neither China nor India were likely to cut back on Russian oil, though tariffs will give Washington leverage in dealing with New Delhi and Beijing, experts said.

“President Trump will sign this law and hold its tariff authority in reserve as an instrument of leverage,” Ronak D Desai, visiting fellow at Hoover Institution, Stanford University, told CNBC. Nearly “a dozen House Republicans privately urged [the] leadership to strip the tariff provisions for fear of rising prices on the eve of the midterms,” he added. 

India is currently negotiating a trade deal with the U.S. and has been pressing Washington for a preferential rate compared to its competitors, while Chinese President Xi Jinping is set to meet with Trump later this month.

Following the Hormuz crisis, the combined share of Russian oil imports by India and China has increased to one-third from one-fifth, according to Kpler. China bought half of Russia’s crude exports as of August-end, followed by India, which purchased 37%, Turkey 5% and the European Union 5%, according to the Center for Research on Energy and Clean Air.

Under current conditions, it would be “extremely challenging” for both countries to replace 3.5 million barrels per day of Russian seaborne supply, in addition to the roughly 600,000 bpd China imports via pipeline, Ivan Ryabov, head of oil trading analysis at Kpler, told CNBC.