Here’s How Trump’s Using The Graham Act To Trap Russia And Crush Iran

The signing of the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 by President Trump on 18 September gives him a huge economic lever to effect massive political change in what is effectively a turbocharged version of the ‘tariff diplomacy’ he has used since taking office for the second term. Its primary purpose is to force both sides into ending the Russia-Ukraine War that started with Russian President Vladimir Putin’s order on 24 February 2022 to commence his ‘Special Military Operation’. This intent was underlined just days after he signed the bill into law, during his 22 September address to the United Nations General Assembly. He specifically linked his newly signed tariff authorities to a renewed push to freeze the conflict, stating: “If necessary, I will have to use them. It’s time to stop the killing,” before adding that he is working closely with both Moscow and Kyiv to secure an agreement “more quickly than people understand.” The Act’s secondary purpose is that it can easily be widened to zero in on Washington’s key global rival, China, for its ongoing activities to support regimes antagonistic to the U.S. and its allies -- not just Russia, but Iran, North Korea, and anywhere else Trump wants to target. So, how effective could this new Act be, and why did Trump sign it off now?History shows that when a man reaches a certain age, his attention focuses on his legacy, perhaps even more so when, as the leader of a great nation, this will be forever recorded in history books. Much has been made of Trump being concerned about the Republican Party performing poorly in the 3 November Mid-Term elections and there is probably some truth to this. However, this is only relevant to him in so far as it would affect the ease with which he could implement all the policies he wants to in his final term as president. One of his most important legacy preoccupations is ending the Russia-Ukraine War -- mainly because it will be a great achievement for his legacy, partly because he said he would do so during his presidential campaigning, and partly because the U.S.’s strategic, political, economic and military ability to manage a two-theatre global conflict (the other being with Iran) is becoming potentially dangerously stretched. Washington knows that this leaves the U.S. and its allies vulnerable to the opening of a third theatre potentially arising from China’s clear intentions to ‘repatriate’ Taiwan in the very near future. In this context, the Graham Act functions as a lever for Trump with both Russia and Ukraine. It contains measures to impose 100% tariffs on all goods imported into the U.S. from the top five global purchasers of Russian crude oil or natural gas, and the top five jurisdictions facilitating sanctions evasion. As of today, the top five individual countries are: China, India, Turkey, Brazil, and Azerbaijan. Having said that, the European Union (EU) as a group would feature in fourth place as a collective, but the U.S. -- currently, at least -- is not including trading blocs in this Act’s application. It also enforces a mandatory tariff of up to 500% on any residual direct Russian imports, blocks all transactions involving Russia’s ‘shadow fleet’ tankers, and codifies strict prohibitions on U.S. capital markets processing any funds connected to the Russian government. For Russia’s war effort in Ukraine, which is already hitting a severe bottleneck as analysed by OilPrice.com, the prospect of either of the Graham Act’s major tariffs looks catastrophic. Whether Washington imposes the 100% tariff on trade with the U.S. under Section 113 is at Trump’s discretion, which means the pressure is further on China’s leader Xi Jinping and India’s Narendra Modi to persuade Putin to finally enter peace negotiations with Ukraine. Meanwhile, the 500% direct and mandatory tariff hits Russia’s last remaining oil and gas transport mechanism to many key buyers, its shadow fleet. The cleverness of the Graham Act, though, may be in particular evidence in the leverage it gives Trump over the other side in the peace equation -- Ukrainian President Volodymyr Zelenskyy. Although Zelenskyy welcomed the Act, praising its “peace through strength” approach, he knows that Trump controls the waivers and the execution of these restrictions, and the U.S. President has shown before that he has no qualms about using the threat of easing or delaying the implementation of tariffs to produce the outcome that he wants.Very elegantly from an intellectual perspective, all of this ties in very neatly to another key legacy issue for Trump -- stopping Iran from ever having a nuclear weapon. As stated in Trump’s original war aims, above all else, the war in Iran is fundamentally aimed at preventing that. It is true that various elements in the war have pushed up oil and gas prices dramatically from recent historical averages. It is also true that there is a clear relationship between this, the economic prospects of the U.S., and the political chances of incumbent presidents and their parties in elections, as analysed in full in my latest book on the new global oil market order. Economically, historical data highlight that every US$10 per barrel (pb) change in the crude oil price results in a 25-30 cent change in the price of a gallon of gasoline, and for every 1 cent that the average price per gallon of gasoline rises, more than US$1 billion or so per year in consumer spending is lost. Politically, since 1896 the sitting U.S. president has won re-election 11 times out of 11 if the economy was not in recession within two years of an upcoming election. By contrast, sitting U.S. presidents who went into a re-election campaign with the economy in recession won only once out of seven occasions. The same pattern applies to mid-term elections as well for the re-election chances of the sitting president’s party.However, Trump’s daughter-in-law, Lara Trump, told journalists just a few days ago that her father-in-law realises that the Iran war could cost him the Mid-Term elections but insisted that losing both chambers of Congress would be worth the cost. “I think he just understands that when Iran gets a nuclear weapon, it doesn’t matter who is in charge of the House, it doesn’t matter the majority in the Senate.” In this context, Trump can legally keep the war in Iran going even if he suffers a total wipeout in the November Mid-Terms. Under the US Constitution, losing a mid-term election does not alter the executive authority of the president, and Trump will also remain the commander-in-chief of the armed forces until January 2029. If Congress used the only real measure available to it to try to stop the Iran War -- choking off military funding -- then there is little doubt that Trump would use the ultimate wildcard he knows he has available to him, which is to declare a national state of emergency. In this event, a president can unilaterally reallocate billions of dollars from civilian construction budgets straight into military construction and operations, bypassing Congressional authorisation entirely. Moreover, if he does lose both Houses in the elections, he would be unencumbered by any concern over higher gas prices and would be even freer to significantly escalate attacks against Iran.Where the Graham Act on Russia fits in is that Trump knows that Moscow and Tehran have built a deeply co-dependent military relationship over the last few years, evidenced by drone technologies, missile sharing, and sanction-busting oil swaps. By aggressively forcing a settlement in Europe using the Graham Act’s leverage, Trump is also aiming to sever Russia from Iran, knowing that if Putin is forced into a diplomatic process to save his own economy, he will be far less likely to actively back Tehran or provide them with advanced air defence systems or satellite intelligence. At the same time, the Graham Act also powerfully augments the force of the Iran Sanctions Act of 1996 through to 2031, which remains Washington’s active, day-to-day enforcement tool against China’s involvement in Iran. Just last week, the U.S. Treasury Department rolled out a sweeping new wave of sanctions under this campaign that directly hit Chinese and Hong Kong facilitators, including blacklisting critical foreign suppliers and front companies based in China and Hong Kong that have been keeping Iran’s industrial and transport networks operational. These networks have become increasingly critical for Tehran in moving petroleum, fertiliser, and chemicals across land borders, given the rigid U.S. naval blockade that has significantly cut off most of Iran’s maritime shipping lanes. Prior to this, Treasury Secretary Scott Bessent issued an indirect warning to China when he said on 24 August that countries would need to sever business ties with Iran or risk being forced out of the dollar-based financial system.By Simon Watkins for Oilprice.comMore Top Reads From Oilprice.comSouth Korea Plans to Triple Canadian Crude Imports as Saudi Share SlipsHouthis Claim Strike on Aramco Facility in Riyadh as Yemen Fighting EscalatesRubio Opens 4-Day NATO Tour in Iceland to Discuss Arctic Security