Trump’s Russia Sanctions Gamble:

India, China, BRICS and the Countdown to De-Dollarisation

Washington’s 100% tariff weapon is designed to squeeze Moscow. But could pressure on India, China and other major economies slowly weaken the dollar-centred system America seeks to protect?

By Mitin Sheth (Shanilohit)

Freelance Senior Columnist | Author | Geopolitical Analyst | Strategic Book Reviewer

Published: September 20, 2026
Estimated Reading Time: 11–13 minutes

Executive Summary

President Donald Trump’s new Russia sanctions law gives Washington authority to impose tariffs of up to 100 per cent on major buyers of Russian energy. The immediate aim is to squeeze Moscow’s oil revenues and increase pressure on Vladimir Putin over the Ukraine war. But the consequences could travel far beyond Russia.

India must protect affordable energy while managing an unfinished trade relationship with the United States. China’s economic weight makes aggressive enforcement more complicated. Russia has spent years adapting to Western sanctions. At the same time, BRICS economies are exploring local-currency trade and alternative payment arrangements.

The dollar remains dominant and shows no signs of immediate collapse. The deeper question is whether repeated use of tariffs and financial pressure will encourage major economies to reduce their dependence on the dollar-centred system. A policy intended to demonstrate American economic power could, over time, strengthen the search for alternatives.

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Introduction

In February 2026, India and the United States appeared to have stepped back from a serious tariff confrontation. Washington removed an additional 25 per cent tariff linked to India’s purchase of Russian oil, while the reciprocal tariff on qualifying Indian goods was brought down to 18 per cent under a new trade framework.

Seven months later, Russian oil is testing the relationship again.

On September 18, President Donald Trump signed the Lindsay O. Graham Sanctioning Russia and Iran Act of 2026. The legislation expands sanctions against Russia and gives the American president powerful new tariff authority against major buyers of Russian energy.

It does not mean that India or China automatically faces a 100 per cent tariff today. Implementation, presidential discretion and waivers remain important. But the possibility itself has changed the political equation.

For Washington, the logic is straightforward: reduce the energy revenues that help Russia sustain its war in Ukraine. For New Delhi, however, the issue is also about affordable energy for more than 1.4 billion people, access to the American market and India’s right to make its own strategic choices.

Behind the immediate dispute lies a larger question: can the United States repeatedly use access to its market and financial system as a geopolitical weapon without eventually encouraging other major economies to build alternatives?

That question connects India, Russia and China with BRICS, the WTO-centred trading order and the long-term future of the dollar.

From February’s 18% Deal to September’s 100% Tariff Threat

Seven months can be a long time in geopolitics.

The February trade framework had created expectations of a reset in India–US economic relations. The White House announced an 18 per cent reciprocal tariff on qualifying Indian goods and removed the additional 25 per cent duty that had been imposed over India’s purchase of Russian oil.

Washington said the removal followed India’s commitment regarding Russian oil imports. Both governments also reaffirmed their intention to negotiate a wider Bilateral Trade Agreement.

Yet that broader agreement has still not been concluded.

India has continued negotiating, but New Delhi has made it clear during the talks that it wants terms that protect important Indian economic interests. A trade agreement between two large economies cannot be sustainable if either side believes it was signed simply because the other had greater power to impose tariffs.

The new Russia sanctions law makes that calculation more difficult.

A trade relationship depends heavily on predictability. Businesses invest when they understand the rules under which they will operate. If tariff exposure can change sharply because of relations with a third country, what begins as a commercial disagreement can quickly become a question of strategic trust.

India’s Russian Oil Dilemma

For India, Russian oil is not simply a foreign-policy symbol.

India is one of the world’s largest crude-oil importers. Energy prices affect transport, manufacturing, agriculture, inflation, government finances and the everyday lives of more than 1.4 billion people.

After Russia invaded Ukraine in 2022 and Western sanctions transformed global energy flows, discounted Russian crude became increasingly attractive to Indian refiners. As a result, Russia emerged as one of India’s most important oil suppliers.

This does not remove the controversy surrounding those purchases.

  Washington and European governments argue that energy exports provide Moscow with revenue while Russia continues its war in Ukraine. That argument deserves serious consideration.

New Delhi, however, looks at the same transaction through another lens: energy security.

India cannot simply remove a major source of crude without asking where replacement barrels will come from, how much they will cost and what higher prices could do to inflation and economic growth.

That problem becomes more serious when global energy markets are already under stress.

If sanctions remove substantial quantities of Russian crude from Asian markets without adequate replacement supplies, oil prices could rise. In an extreme scenario, a policy intended to reduce Russian income could have an unintended consequence: Russia sells fewer barrels but receives a higher price for those it can still place on the market.

India has therefore repeatedly placed the needs of its population and economy at the centre of its energy policy.

The dispute is not simply about whether India supports Russia or supports America.

It is about whether India should allow another country to determine where it can buy the energy required to run one of the world’s largest economies.

For New Delhi, that question goes to the heart of strategic autonomy.

Is Washington Risking Its Strategic Partnership with India?

A deeper contradiction lies in American policy.

For more than two decades, Washington has invested heavily in building a closer relationship with New Delhi.

Defence cooperation has expanded. Technology ties have deepened. The two countries work together through the Quad. Their interests overlap in the Indian Ocean and Indo-Pacific. Both have reasons to prevent any single power from dominating Asia.

India is not an American treaty ally and has never presented itself as one. Its foreign policy centres on strategic autonomy. Yet its geography, military capability, economic size and position in the Indian Ocean give it unusual weight in the Asian balance of power.

That becomes particularly important as China’s economic and military influence grows.

If Washington wants a stronger India in the Indo-Pacific, repeatedly exposing Indian exports to the threat of severe tariffs creates an obvious tension.

The United States may gain negotiating leverage in the short term. But it could simultaneously encourage New Delhi to reduce the economic vulnerabilities that make such leverage effective.

This does not mean that America is “losing India.” India is too independent to belong to Washington, Moscow or Beijing in the first place.

The danger is subtler: Washington could weaken the trust it has spent years building.

South Asia analyst Michael Kugelman has warned that the legislation could seriously damage India–US relations. He has also highlighted an important part of India’s record: Prime Minister Narendra Modi has repeatedly called publicly for dialogue and an end to the Russia–Ukraine conflict.

India has maintained relations with Moscow, but that does not mean New Delhi has endorsed the war.

That distinction matters.

The China Question Washington Cannot Ignore

China makes the sanctions strategy even more complicated.

Beijing is also a major buyer of Russian energy. Yet its economic relationship with the United States is enormous and deeply woven into global supply chains.

China sits at the centre of much of global manufacturing. It has considerable leverage in critical minerals, industrial inputs and international trade. Washington and Beijing compete strategically while remaining economically connected in important areas.

That raises a difficult question in New Delhi.

If the sanctions policy is fundamentally about Russian energy purchases, will major buyers be treated according to the same standard?

The new law does not automatically impose an identical 100 per cent tariff on India and China. Presidential discretion and waiver provisions matter.

That flexibility may be necessary, but it also makes political judgment important.

If India concluded that Washington was willing to exert stronger pressure on New Delhi because confronting Beijing carried greater economic costs, the damage would go far beyond Russian oil.

It would become a question of strategic trust.

And that would be an extraordinary outcome for an American policy partly justified in the language of national security.

Russia Has Learned to Adapt to Sanctions

Western sanctions have imposed genuine costs on Russia.

Access to finance has become harder. Technology restrictions have affected industries. Shipping, insurance and payment arrangements have become more complicated.

But sanctions also create incentives to adapt.

Russia has redirected much of its energy trade towards Asia. New shipping arrangements have emerged. Alternative financial channels have expanded. The so-called shadow fleet itself illustrates how markets change when conventional shipping and insurance networks become difficult to use.

The new American legislation tries to close some of these routes by expanding sanctions and targeting evasion networks.

But every new restriction also creates another search for a workaround.

This does not mean sanctions are ineffective. It means their effects evolve over time.

A country that expects to remain under sanctions for years has powerful reasons to develop systems that reduce their impact. Once those systems are established, they may also become available to other countries.

That is where the Russia sanctions story connects to a much larger debate over the international financial system.

BRICS: Building Alternatives Without Abandoning the Dollar

The BRICS summit held in New Delhi in September offers an important clue.

BRICS did not announce a common currency. Nor did India support an immediate campaign to overthrow the dollar.

The New Delhi Declaration took a more practical approach. BRICS leaders acknowledged ongoing work on cross-border payment mechanisms and interoperability between payment and messaging systems. They also discussed trade settlement and investment using members’ local currencies while recognising national priorities and the fact that no single model suits every member.

The declaration also encouraged the New Development Bank to expand local-currency financing and diversify its funding sources. This distinction is important.

BRICS does not need to create a single currency tomorrow to reduce some dependence on the dollar.

India and the UAE can settle more transactions in their own currencies. China can expand use of the renminbi. Development banks can increase local-currency lending. Payment networks can become more interoperable.

None of these developments individually replaces the dollar. Together, however, they create options. And options reduce vulnerability.

That may ultimately matter more than dramatic political declarations about a new BRICS currency.

De-Dollarisation: A Slow Shift, Not a Dollar Collapse

The phrase “de-dollarisation” is often misunderstood.

The world is not about to wake up one morning and discover that the dollar has disappeared from international finance. The dollar remains extraordinarily powerful.

IMF analysis published in September notes that the dollar still accounts for more than 80 per cent of trade invoicing and nearly 85 per cent of foreign-exchange settlement in the ASEAN+3 economies. Roughly two-thirds of official reserves in that region are also held in dollars.

Those numbers do not describe a currency facing immediate collapse. But the same analysis points to another trend.

Asian economies are gradually developing local-currency settlement arrangements and alternative payment pathways. The IMF describes this not as an ideological divorce from the dollar, but as pragmatic diversification shaped partly by geopolitical fragmentation and the desire for greater strategic resilience.

That is the more realistic meaning of de-dollarisation. The dollar can remain number one while becoming slightly less indispensable. A country can continue holding large dollar reserves while settling more bilateral trade in local currencies.

A company can continue borrowing in dollars while gaining access to another payment channel. A central bank can continue relying heavily on dollar assets while gradually diversifying part of its reserves.

This is not revolution.

It is insurance.

Repeated use of tariffs and financial restrictions can increase demand for that insurance.

Could America’s Financial Weapon Slowly Weaken Its Own Advantage?

The extraordinary power of American sanctions comes partly from the dollar's central role and the American financial system. But the dollar’s strength is not based only on Washington’s ability to punish. It is also based on trust.

Governments, central banks, investors and businesses use dollars because American financial markets are deep, liquid and widely accessible. The system offers a scale that no competitor currently matches. That creates a paradox. The more frequently access to the dollar-centred system becomes a geopolitical weapon, the greater the incentive for countries worried about future pressure to build alternatives.

India does not need to become anti-American to want additional payment options.

China does not need to abandon the dollar completely to expand use of the renminbi.

Gulf economies do not need to reject American financial markets to settle part of their trade in other currencies.

BRICS does not need a common currency to make local-currency settlement easier.

The long-term challenge to dollar dominance may therefore not arrive through one dramatic announcement.

It could emerge through thousands of smaller decisions.

The WTO Question: When Trade Becomes a Strategic Weapon

The new tariff authority also raises serious questions about the future of global trade.

It would be too simple to declare that every threatened 100 per cent tariff automatically violates WTO law. WTO agreements contain tariff commitments and non-discrimination principles, but they also provide flexibility for measures justified on national-security grounds. The legality of any specific action would depend on its design, implementation, justification and possible legal challenge.

The broader problem is easier to see.

The WTO warned in its 2026 World Trade Report about the economic dangers of geopolitical fragmentation and the growing use of unilateral restrictions. Its simulations estimated that a world divided into geopolitical trading blocs could reduce global GDP by 5.1 per cent and global exports by 18.6 per cent. That is the danger when trade stops being primarily an exchange of goods and services and increasingly becomes an instrument of strategic pressure.

One country imposes tariffs. Another retaliates. Companies move supply chains. Governments build protective barriers. Countries try to reduce dependence on potential rivals. Each decision may make sense on its own.

Together, they can create a poorer and more fragmented global economy.

Could Trump’s Sanctions Strategy Backfire?

Supporters of Trump’s strategy have a serious argument.

Russia is fighting a major war in Europe. Energy exports provide Moscow with revenue. If countries continue buying large quantities of Russian oil while enjoying access to the American market, Washington can reasonably ask whether that access should come without conditions. That argument should not simply be dismissed.

The real test is whether the policy achieves its objective without creating higher strategic costs. If sanctions substantially reduce Russian revenues, encourage serious negotiations and do so without damaging important American partnerships or destabilising global energy markets, Washington can argue that the pressure worked.

But another outcome is possible.

Pressure on Russia could push Moscow deeper into non-Western economic networks.

Pressure on China could give Beijing another reason to expand alternative financial infrastructure.

Pressure on India could encourage New Delhi to diversify export markets, energy suppliers and payment channels.

BRICS members could find additional practical reasons to expand local-currency settlement.

Other countries in the Global South could watch these developments and conclude that reducing excessive dependence on any single financial system is simply prudent risk management.

None of this requires a coordinated anti-American alliance. Countries only need to decide that diversification reduces risk.

That is how economic pressure can backfire without visibly failing on its first day.

India’s Answer: Strategic Autonomy Through Diversification

India’s long-term response does not require choosing one bloc against another.

Replacing dependence on Washington with dependence on Moscow or Beijing would not be strategic autonomy. The stronger approach is diversification.

India needs multiple energy suppliers, multiple export markets and multiple financial channels. It can deepen economic, defence, and technology cooperation with the United States wherever interests overlap, while expanding trade with Europe, the United Kingdom, the Gulf, Africa, Southeast Asia, and other markets.

It can strengthen domestic manufacturing and encourage greater international use of the rupee where genuine commercial demand exists.

India can also participate in BRICS financial initiatives without turning them into an ideological campaign against the dollar. Strategic autonomy becomes meaningful when a country has choices.

The more choices India possesses, the less vulnerable it becomes to pressure from any single capital.

Conclusion: The Real Test of American Economic Power

The new Russia sanctions law demonstrates the extraordinary reach of American economic power.

But power has two dimensions.

One is the ability to impose costs.

The other is the ability to make countries want to remain inside the system you lead.

The first can be demonstrated overnight with a tariff or sanction.

The second takes decades to build.

For India, the challenge is to protect affordable energy, preserve access to major markets and retain freedom of strategic choice.

For Russia, the legislation increases pressure to survive outside Western economic channels.

For China, it provides another reason to strengthen alternative financial infrastructure.

For BRICS, it may add momentum to practical local-currency settlement and cross-border payment systems.

For Washington, however, the question is larger than any single barrel of Russian oil. Can the United States weaken Russia without weakening confidence in the wider economic system that gives American sanctions their exceptional power?

The dollar is not facing sudden collapse. It remains the dominant currency of international finance, and no credible replacement is ready to take its place. But monetary power does not have to disappear to decline at the margins.

If major economies gradually build alternative payment routes, settle more trade in local currencies and diversify financial exposure, the world could slowly become less dependent on the dollar even while the dollar remains number one.

That is the real countdown worth watching.

Trump’s Russia sanctions law is intended to demonstrate the reach of American economic power. Its longer-term legacy, however, may depend on whether other countries respond by accepting that power or by quietly building a world in which they need it less.

About the Author

Mitin Sheth (Shanilohit) is an Indian author, geopolitical analyst and strategic book reviewer who has been associated with the Janmabhoomi Group of Newspapers as a freelance Senior Columnist for more than 25 years. He has written extensively on international affairs, geopolitics and strategic issues. His work also focuses on defence and military affairs, emerging technologies, global security, and India’s evolving role in the international order.

 Selected References

The White House — “Congressional Bill H.R. 5334 Signed into Law,” September 18, 2026.
Official confirmation that President Trump signed H.R. 5334 into law.

The White House — “United States–India Joint Statement,” February 6, 2026.
Framework covering the 18 per cent U.S. reciprocal tariff and continuing bilateral trade negotiations.

The White House — Fact Sheet: The United States and India Announce Historic Trade Deal, February 9, 2026.
Official details of the February India–US tariff reset and trade framework.

The White House — Modifying Duties to Address Threats to the United States by the Government of the Russian Federation, February 6, 2026.
Removal of the additional 25 per cent India tariff connected with Russian oil and provisions concerning future purchases.

Reuters — Russia sanctions bill gives Trump sweeping new tariff powers, September 18, 2026.
Analysis of the legislation, tariff authority, waivers and implications for major Russian-energy buyers.

Reuters — New U.S. sanctions bill on Russia puts India’s Modi in a bind, September 18, 2026.
Analysis of India’s energy-security and trade dilemma.

Reuters — India says new U.S. tariffs over Russian oil could hit ties, vows to protect energy security, September 17, 2026.
India’s response and the implications for India–US relations.

BRICS — New Delhi Declaration: Building for Resilience, Innovation, Cooperation and Sustainability, September 12, 2026.
Local-currency settlement, cross-border payment cooperation and New Development Bank financing.

International Monetary Fund — Asia’s Pragmatic Currency Pivot, September 2026.
Analysis of continuing dollar dominance alongside gradual currency and payment-system diversification.

World Trade Organisation — World Trade Report 2026.
Analysis of geopolitical fragmentation, unilateral trade restrictions and risks to the multilateral trading system.

Disclaimer

This article is an independent analysis based on publicly available information, official statements, credible media reports, and open-source research. It is intended for informational and analytical purposes only. The views and interpretations expressed are those of the author. While I have made every effort to ensure factual accuracy, developments may change as new information becomes available.

Editorial Transparency & Full Disclosure

This is an independently researched and authored analysis. Advanced digital tools and AI were used solely for supplementary support tasks, including research cross-referencing, translation verification, image generation, and grammatical refinement. The core analytical insights, strategic conclusions, and creative direction are entirely the author’s own.

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