A barrel of Russian crude purchased in Asia might seem far removed from an American manufacturer waiting for critical machinery components, or a hospital awaiting life-saving pharmaceuticals, or a retailer building its inventory of the hottest holiday gift items this year. But the distance is shorter than it appears.
On Sept. 18, President Donald Trump signed into law the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. The law gives the U.S. authority to impose tariffs of up to 100%, on top of other applicable duties, on goods from countries that rank among the largest purchasers of Russian oil or natural gas, or are identified as major facilitators of sanctions evasion. The objective is to make continued purchases of Russian energy more costly. But if the tariffs are applied to large economies such as China or India, the effects would not be isolated to the global energy markets.
Most companies will ask, “What would a 100% tariff cost us?” A better question is, “What happens if tariffs rise while energy prices increase, shipping becomes more expensive, and thousands of companies simultaneously search for alternative suppliers?” Because oil, transportation and manufacturing are interconnected, secondary tariffs could produce a far more complicated response than an ordinary tariff.
China and India aren’t simply purchasers of Russian oil. In 2025, the U.S. imported approximately $308.7 billion in goods from China and $103.8 billion from India. That’s more than $400 billion in annual imports exposed, directly or indirectly, to changing trade conditions.
The first impact would appear in the oil market. India remains one of Russia’s largest crude customers, although its purchases are already shifting. India’s Russian oil imports fell about 16.5% in August to roughly 2.1 million barrels per day, according to Reuters, with preliminary September volumes around 1.9 million. Chinese refiners have continued buying Russian crude, and in September their demand helped push ESPO Blend prices above $120 per barrel as Middle East disruptions tightened supply, Reuters reported.
If major buyers reduce Russian purchases, refiners must find replacements from the Middle East, Africa, Latin America or the U.S. Each shift changes voyage distances, tanker requirements, port calls, insurance arrangements and transportation costs. Energy shipping is already under strain. The cost of moving crude on some very large crude carriers has exceeded $30 per barrel.
The second impact would be felt in manufacturing, through products that have nothing to do with oil. China remains an important source of electronics, machinery, industrial components, chemicals and consumer products for U.S. businesses. India plays a growing role in pharmaceuticals, chemicals, engineering products, electronics and textiles. If imports from either become significantly more expensive, companies must absorb the cost, pass it to customers or find another supplier.
None of those options is instantaneous. “Supplier diversification” sounds simple. In practice, replacing a supplier can require months of qualification, tooling changes, testing, quality approval and contract negotiations, and it’s considerably more complicated in regulated industries such as pharmaceuticals, medical devices and aerospace. A company might find the product available elsewhere, but not at the required volume, price, quality or delivery schedule.
The third impact comes from companies themselves. Businesses don’t wait for tariffs to arrive. They accelerate imports, build inventory, reserve transportation capacity and search for suppliers in countries they believe will be less exposed. Individually, these decisions can be rational. When thousands of companies make them at once, factories in alternative sourcing countries receive more orders, ocean bookings increase, warehouses fill, lead times grow and prices rise. We have seen this before. During previous tariff changes, trade policy didn’t simply change prices; it changed when goods moved, where they moved from, and how much inventory businesses were willing to hold.
These pressures compound. Imagine a U.S. company sourcing components from China with an alternative supplier in India. If both countries face trade pressure over Russian energy, switching between them may not reduce its exposure. The company could try to move toward Vietnam, Mexico or another Southeast Asian market. But a product assembled in one of these countries might still depend on Chinese components, Indian chemicals, Russian-origin energy or raw materials sourced through the same regional network. The country printed on the shipping document doesn’t always reveal the full supply chain behind the product.
That’s why knowing the Tier 1 supplier is no longer enough. Companies need to understand where critical components originate, which suppliers share the same upstream producers, where energy-intensive manufacturing occurs, and which transportation routes could become constrained. Through some of the more advanced operations research approaches, they can stress-test their most important supply chains against several shocks occurring at once, identifying components with only one qualified supplier, products with long replenishment times and markets where alternative capacity is limited.
Strategic inventory might make sense for some critical products, while dual or regional sourcing might be better for others.
None of this means secondary tariffs will necessarily produce a major U.S. supply-chain disruption. The law leaves considerable room in how tariffs are applied, and countries may reduce Russian purchases or negotiate exemptions first. Supporters argue that restricting the value of Russian energy exports strengthens pressure on Moscow and discourages sanctions evasion. Those benefits are part of the policy calculation.
But the chain is real. A sanction on Russian energy can change where India buys crude. That shift can influence tanker demand. A tariff tied to China’s Russian purchases can change the economics of importing manufactured goods, sending orders to alternative factories, ports and shipping lanes. The shock moves through the network until it reaches an American factory, hospital or retailer.
Businesses don’t decide foreign policy. But they must prepare for its operational impacts and related consequences.
Manikandan Chandran is a senior software engineer and researcher specializing in artificial intelligence, maritime transportation and global supply-chain resilience.