US biz groups warn senators over Russia sanctions bill targeting India, others

Washington: American business groups are raising concerns over a proposed Russia sanctions bill that could impose steep penalties on countries continuing to purchase Russian oil and gas, warning US senators that the legislation could also hurt American companies and consumers.

The bill has particular significance for India and China, two of the world's major buyers of Russian energy. Under the current version, the proposed legislation would give the US president the authority to impose secondary tariffs of up to 100% on major importers of Russian oil.

The warnings come as Washington continues to debate how aggressively to pressure Moscow over the Ukraine war while avoiding unintended consequences for the wider global economy.

Why US business groups are concerned

The US Chamber of Commerce and other business organisations have previously raised objections to the sanctions approach, arguing that penalties on countries buying Russian energy could ultimately increase costs for American businesses.

The concern is that tariffs imposed on foreign countries could trigger higher prices, disrupt supply chains and invite retaliatory measures against US exports.

The Chamber has argued that the costs of such measures could eventually be passed on to American companies and consumers.

India could be directly affected

India has become one of the most important buyers of Russian crude since the Ukraine conflict disrupted traditional Russian energy markets.

The proposed sanctions mechanism is therefore particularly sensitive for New Delhi. If the US president were to impose the maximum secondary tariff against countries importing Russian oil, Indian exports to the US could face a significant additional burden.

The latest version of the legislation, however, represents a reduction from earlier proposals. A previous draft had threatened tariffs of as much as 500% against countries buying Russian energy. The current version caps the potential tariff at 100%.

Bill seeks to target Russia's energy revenues

The broader objective of the legislation is to put additional pressure on Russia by targeting revenue generated through its energy exports.

The measure, associated with Republican Senator Lindsey Graham and bipartisan efforts in Congress, would allow Washington to use tariffs against countries continuing significant purchases from Russia.

The idea behind the secondary sanctions is to make continued trade with Russia more expensive for third countries, thereby putting additional pressure on Moscow.

India faces a difficult balancing act

For India, the issue is particularly important because Russian crude has played a major role in meeting the country's energy requirements.

New Delhi has maintained that its energy purchases are driven by national economic interests and that it should be free to source oil at competitive prices.

At the same time, Indian companies have generally sought to remain compliant with applicable US and international sanctions to avoid disruptions to their access to global financial and trading systems.

The potential US measures therefore create a delicate situation for both Indian businesses and policymakers.

Why American companies are pushing back

US business groups are not necessarily defending Russia. Their concern is more about the economic consequences of secondary sanctions.

Companies fear that forcing major economies to reduce or abandon Russian energy purchases rapidly could tighten global energy supplies and push prices higher. American exporters could also face retaliation if targeted countries respond with their own trade restrictions.

That is why business groups are urging senators to consider the impact on American companies before approving the legislation.

Bill's future remains uncertain

The sanctions legislation has attracted substantial congressional attention, but its final shape and timing remain uncertain.

A separate report earlier this month indicated that the bill could face delays in the House, providing temporary relief to countries such as India that could otherwise face increased trade pressure.

For India, the immediate focus will be on whether Washington ultimately activates the proposed secondary tariffs and, if so, how the administration defines the countries and transactions subject to them.

The debate also highlights a broader challenge for the Trump administration: how to increase economic pressure on Russia without imposing significant costs on US businesses and consumers or damaging relations with major trading partners such as India.