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Last week, President Trump announced renewed and expanded transfers of weapons to Ukraine in support of its defense against Russia. As Putin has grown more aggressive, despite the United States pushing for a ceasefire, the president has hinted at the need to dial up the pressure on Russia. In his press conference on July 14, 2025, he warned that Russia had 50 days (ending September 2) to negotiate a ceasefire, before the United States would impose 100 percent “secondary tariffs” on Russia, which can be presumed to apply to importers of Russian energy exports.
Limiting Russian energy revenues has been a primary objective for Western policymakers since the start of the Ukraine war. The oil price cap mechanism was devised to reduce revenues while maintaining market access for Russian barrels and avoiding a global price spike. However, the policy has not appreciably reduced Moscow’s oil revenues, mainly due to lax enforcement and the rise of the “shadow fleet” of tankers. As such, Russian oil prices have remained higher than the architects of sanctions intended, leaving ample revenues in the Kremlin’s war chest.
Now, the president and other U.S. policymakers are looking for options to put far greater pressure on Russian oil revenues. There is strong bipartisan support for Senator Lindsey Graham’s (R-SC) proposed Sanctioning Russia Act (SRA), which seeks to end the sale of Russian oil, gas, uranium, and other key commodities by threatening buyers with 500 percent “secondary tariffs.” Such high tariffs would effectively halt trade between countries that import Russian energy and the United States. The triggering mechanism is a presidential determination that Moscow has violated Washington’s demands, including any military action against Ukraine—the very next shot fired following enactment would qualify. Failure to negotiate an end to the war would also trigger sanctions. Only a lasting ceasefire and good-faith war-ending negotiations would save Russia and its counterparties from the new sanctions.
The tariff model offers a novel pathway to limiting Russian oil revenues but faces many of the same challenges that previous attempts tried to manage. First, if it successfully reduces Russian oil shipments into global markets, the reduction in supply could cause a global price increase.
Russia exports 6.3 million barrels per day (mb/d) of crude oil and refined products like gasoline and diesel. Assume all of Russia’s several dozen customers except for China and Turkey (1.6 mb/d combined) do exactly what the SRA demands by halting purchases. The global oil market could lose up to 4.7 mb/d of crude and petroleum fuels, causing prices to skyrocket.
How high could prices spike in this case? Perhaps not as high as spring 2022 following Russia’s invasion, since spare capacity is higher today, but likely back above the $100 per barrel level for crude and $4 per gallon national average gasoline price—certainly a showstopper for President Trump as it was for Biden.
As seen in Figure 1, while the Organization of the Petroleum Exporting Countries (OPEC) holds more spare production capacity now (4.4 mb/d) than it did in 2022 (2.4 mb/d), it would quickly drain toward zero if pressed into service to offset the loss, further amplifying the price shock. And although non-OPEC oil supply is expected to grow in the coming years, its incremental additions won’t be sufficient to offset such a large disruption.
The likely result of a sustained triple-digit oil price spike would be stagflation and a big hit to U.S. jobs, business performance, and consumer prosperity.
Second, if countries do not stop buying oil from Russia, the tariffs that will be imposed will themselves raise costs on U.S. consumers and challenge U.S. relationships with important countries like India and Turkey. Tariffs of 500 percent, like those proposed in the SRA, would effectively halt trade with any country that imports or handles Russian oil and other listed commodities once triggered by a presidential finding. Following through with that threat (imagine halting $87 billion in bilateral trade with India) would hurt U.S. economic and geopolitical interests as well. Indian officials have, so far, expressed confidence about navigating the challenge.
Recognizing the lose-lose prospect, buyers like India might call the United States’ bluff, in which case the exercise will have backfired with little to no new pressure on Putin. And if the United States offers carveouts, for example, to countries Washington has credited with assisting Kyiv, then, too, Putin would be off the hook from a meaningful revenue hit.
Rather than imposing large, fixed tariffs against importers of Russian energy with no recourse, the United States could require importers to start sending a portion of the discount they get on Russian barrels in the form of a surcharge payable to the U.S. government. This approach would generate considerable revenues to be used for Ukraine’s defense.
Russian oil is discounted relative to competing supplies to account for its higher costs and risk profile; this discount awards Moscow’s customers higher margins and greater savings than they would have otherwise. The most noteworthy case study is India, which took only a trickle (20,000 barrels per day) of Russian oil prior to the imposition of sanctions. Once those sanctions pushed Russian barrels into steep discounts, India’s purchases skyrocketed, reaching 2 mb/d at peak. That 100x increase is estimated to have saved Indian refineries some $11–25 billion in 2023–2024 while enabling Putin to continue exporting and making plenty of money to fund his war on Ukraine.
The United States could capitalize on this situation by hitting all buyers of Russian oil with secondary tariffs unless they pay a surcharge that makes those purchases more expensive and redirects most of the “Russia discount” to the U.S. government.
Just as Washington expects with tariffs generally, buyers will demand that Moscow further reduce its sale price by approximately the amount of the fee to remain competitive. For example, if competing supplies represented by international benchmark Brent crude sell for $70 and the required fee for avoiding secondary tariffs is $20, then Russian barrels would be uncompetitive above $50.
A version of this concept was described by Catherine Wolfram and Glenn Hubbard, although they recommended traditional secondary sanctions rather than a secondary tariff mechanism.
Tariffs, especially those approved by Congress, are politically powerful, relatively easy to administer, and already being wielded by President Trump. By contrast, sanctions require heavy lifting from specific executive authorities and issuances of licenses from the U.S. Department of the Treasury’s Office of Foreign Assets Control, already very busy enforcing worldwide measures against oil trades from Russia, Iran, and Venezuela. Applying new sanctions to millions of barrels of daily production also risks driving global financial transactions away from the U.S. dollar and into opaque alternative marketplaces.
A word about methodology: Russian oil exports are a mix of crude oil, premium fuels, and lower-value refined products, each of which commands different pricing. However, for simplicity, we model a composite barrel of Russian oil that we assume, on average, will price like Urals.
The cyclical nature of oil prices makes a fixed fee (like $20 per barrel) unfavorable because in a high oil price environment (say $80+ per barrel), even a $20 discount would still earn Russia $60+ per barrel—much too high to cause a revenue hit.
Instead of a fixed dollar value, therefore, the surcharge needs to float with the price of Brent. To cap Russian Urals crude at $45 per barrel, for example, the fee to avoid secondary tariffs would equal the Brent price minus $45. How might this look in the real world? The U.S. Energy Information Administration forecasts Brent crude will average $58 per barrel in 2026. If policymakers seek to keep Russian oil at or below $45 per barrel, then the surcharge to avoid secondary tariffs should be set at $13 per barrel. As Brent fluctuates, policymakers can adjust the surcharge to keep Russian oil at $45.
Assuming compliance with the new payment scheme from all of Russia’s energy customers (except Turkey and China, less likely in our view to comply with Washington’s requirements) would mean that the price for the majority (4.7 mb/d) of Russian exports would be pushed down to $45 per barrel, pulling expected Kremlin revenues down by more than $22 billion next year versus benchmark prices. An equivalent new cash flow of $22 billion would arrive in U.S. coffers to be spent on the defense and rebuilding of Ukraine.
This simple surcharge mechanism would be far more effective than the largely ineffective G7 price cap that has been plagued by fraudulent attestations, lax enforcement, and the potent shadow fleet. Likewise, the European Union’s latest price cap formulation will be subject to the same vulnerabilities.
This proposal thus transforms the United States’ new willingness to leverage energy dominance and tariffs to advance U.S. geopolitical interests into real cash deprivation for Putin and new cash inflows to help fund Ukraine’s defense. It also offers Congress an opportunity to support President Trump with powerful—and practical—measures to advance U.S. vital interests and harness market forces to the nation’s advantage.
Clayton Seigle is a senior fellow in the Energy Security and Climate Change Program and holds the James R. Schlesinger Chair in Energy and Geopolitics at the Center for Strategic and International Studies (CSIS) in Washington, D.C.