Trump Suspended a Russia Sanctions Law; China and India Escape Tariffs

Trump suspended the Russia sanctions law he signed on September 18, a day or two before it was due to bite. The White House released the order on the evening of Friday, October 16, after US markets had closed.

The law is the Lindsey O. Graham Sanctioning Russia and Iran Act. It cleared the Senate 86 to 11, and its provisions were set to start on October 18.

Because the order landed on a weekend, it is not yet priced. Brent rose 3.7% on Friday to settle at $109.86, after touching $110 for the first time since May.

What the Law Required

According to a Morgan Lewis summary, the law had two layers. Russian goods faced tariffs of up to 500%. The second layer was a tariff of up to 100% on the five largest buyers of Russian crude or gas.

The detail in the second layer matters most. The tariff applied to everything the target country sells to the US, not only to Russian energy. Any knowing new purchase after October 18 was enough to qualify.

S&P Global Platts data show China bought 1.415 million barrels a day of Russian crude in September and India 816,000. India's purchases had fallen 59% in a month as New Delhi prepared for the law.

The order suspends all of those layers. Earlier sanctions imposed by executive order, export controls and EU sanctions stay in place.

What the Order Is, and What It Is Not

This is an action, not a statement. Section 115 of the law lets the president waive any provision by certifying to Congress that it serves the national interest. No congressional vote is needed.

The order has no end date. It says the waiver lasts until the president or the secretary of state decides "further action is appropriate."

Secretary of State Marco Rubio said on Saturday that Trump will take up to 60 days to study the impact. That window comes from Rubio, not from the order. The decision is a reversible deferral, not a permanent one.

Markets will not read this as a Russia story. They will read it as a story about Gulf supply.

When the Tariff Hits the Country, Not the Oil

Putting India's choice into numbers shows the mechanism. The discount on Russian oil has to be weighed against the risk to exports to the US.

The tariff would not have removed Russian oil from the world; it would have changed who buys it. Every barrel India gave up would have had to come through the Strait of Hormuz or Saudi Arabia's Red Sea port of Yanbu.

Both exits were under fire this week. Reuters reported that the Saudi-led coalition shot down a ballistic missile aimed at Yanbu on October 16. UKMTO, the UK's maritime trade office, says traffic through the strait is about 70% below prewar levels.

Weekend News That Pulls Both Ways

Iran's Revolutionary Guards said on Saturday that a supertanker carrying more than two million barrels of crude hit a mine and caught fire. The ship was not named, and the claim has not been independently verified. The Guards repeated that the strait is closed.

The waiver is a supply decision that pushes oil lower. The tanker claim is a risk headline that pushes it higher. Which one wins at Monday's open will show how binding the market considers each.

The chart frames how the broad market traded over the past month as oil crossed $100. The link between oil and inflation also bears directly on the Fed's October 27-28 meeting.

What It Means for Investors

• On Friday the market priced the Hormuz and Yanbu risk but not the waiver; whether Brent drops below $110 on Monday is the first test.
• Companies such as Apple that import from India and China are, for now, clear of the risk of tariffs of up to 100% on both countries.
• For producers such as ExxonMobil and Chevron, the extra demand pressure on the Gulf is gone; price support now rests on Hormuz alone.
• The risk to this view is that Rubio's 60-day review restores the tariffs in mid-December; legally, a single signature can change the decision.

Sources: The law's provisions come from legal summaries by Morgan Lewis and Debevoise & Plimpton; the order's text and Rubio's comments come from Reuters reports (via The Moscow Times, ABC News and RFE/RL). Russian export volumes and the Urals discount are S&P Global Platts data. India's 2024 exports are USTR data; the discount calculation is the author's. The tanker claim is Iran's Revolutionary Guards' and has not been independently verified.