Why US' Russia act need not worry India

New York: The US' legislative process is Darwinian. Thousands of bills are introduced in Congress every year. Only close to 3% in recent years are passed, the rest left to languish in committees and subcommittees before dying unceremonious deaths.

No one knows what makes for the 'fittest' bill that survives the legislative process. It's generally the more inconsequential a bill is, the faster it becomes law. The less controversial it is, the more likely it is to pass. Bills commemorating 'National Lobster Day' or 'National Blueberry Month' are passed without much hassle.

According to BillTrack50, 95 Acts commemorating days or months for one cause or another were passed by the last US Congress. More consequential legislative proposals did not enjoy the same fate. Indeed, it's this lethargy in the legislative process that has led the executive branch to rely increasingly on presidential executive orders to implement policy.


The question that concerns India is whether the proposed Sanctioning Russia Act (SRA) will be passed by both houses of Congress, receive Trump's signature, and become law. The bill grants POTUS the authority to impose tariffs of up to 100% on the top 5 purchasers of crude oil and gas from Russia. If passed, India and China would be the most affected.

But fear not: by the law of averages, probability is low. Now that Trump is asking the senate to revise the bill to include Iran and rename it, perhaps 'Sanctioning Iran and Russia Act', the legislation is as good as dead.

SRA has been in the making for more than a year. It has, at times, been supported, but more often opposed, by the Trump regime. The original bill proposed granting the president authority to impose a 500% tariff on countries buying crude oil and gas from Russia. By purchasing Russian energy, the bill argued, these countries were funding Russia's war in Ukraine, and a punitive tariff would discourage such purchases.

Last week, a somewhat diluted version suddenly acquired new life when 60 senators signed on to it following the death of one of its sponsors, Lindsey Graham, to commemorate his life. The market did not even blink. An early sign that the bill may not proceed further, pass anytime soon or, even if it does pass, may never be implemented.

There are officials within the Trump regime - most notably treasury secretary Scott Bessent - who oppose tighter sanctions. Over the past year, Bessent has extended sanctions waivers on Russian oil three times to prevent crude prices from soaring. By restricting Russian oil and gas exports, sanctions reduce global supply and raise energy prices, ultimately burdening US consumers. Sanctions have also encouraged some countries and traders to conduct transactions in currencies other than dollar, potentially weakening dollar's dominance in international trade.

The proposed legislation contains several important waiver provisions that substantially limit its scope. Most European countries are effectively exempt because the bill excludes countries whose purchases of Russian natural gas account for less than 15% of their total gas imports.

Over the past three years, since Russia's invasion of Ukraine in Feb 2022, European governments have diversified their energy supplies by increasing imports of LNG from the US, expanding pipeline imports from Norway, and sourcing additional oil and gas from West Asia and other suppliers. As a result, Russian energy now accounts for only a small share of Europe's energy mix, allowing most European countries to qualify for the bill's waiver provisions.

While the current bill doesn't appear to have much traction left, there is, in some sense, nothing novel about it. The Trump regime used similar tactics last year. The only difference is that those policies were implemented without congressional approval. The bill would have explicitly granted that authority to POTUS, making any such action far more difficult to challenge in court.

Trump can, of course, impose tariffs through other channels, legal or otherwise. China's response to any additional tariffs is unlikely to differ from its actions over the past year. It would almost certainly retaliate by imposing comparable tariffs on US exports, and could once again tighten restrictions on exports of rare earth minerals and other strategically important inputs, leveraging its dominant position in global supply chains.

India, however, lacks an equally potent retaliatory instrument, and must adopt a broader strategic response to US tariff threats. Its approach should rest on two pillars:

Diversify sources of crude oil to reduce vulnerability to disruptions in supplies from any single country.

Accelerate the transition away from imported fossil fuels by expanding electrification, promoting e-mobility and investing more aggressively in renewable energy (RE).