The Graham Act requires the President under specified conditions to impose new tariffs against both Russia itself and countries that continue to engage in specified dealings with Russia but leaves the President considerable discretion in setting the levels of those tariffs.
Section 112 requires the President, within 30 days of enactment (i.e., by October 18), to increase the rate of duty by up to 500% (in addition to any other duties, fees, taxes, or charges), on all goods (including energy products, other than certain imports of enriched uranium) imported into the United States from Russia. This increased rate is to be applied in addition to other applicable tariff rates.
More significantly — given the low volume of current U.S. trade with Russia — section 113 of the Act also requires the President to increase the rate of duty by up to 100% on all goods imported from certain countries that purchase Russian crude oil or natural gas or that “facilitat[e] Russian oil sanctions evasion.” Again, this increased rate is to be applied in addition to other applicable tariff rates on goods imported from those countries. Given the controversy surrounding President Trump’s use of existing tariff authorities, this provision, which creates a new presidential authority to impose tariffs, represented one of the most politically contentious features of the Graham Act prior to its passage.
As structured, the Act requires the President, within 30 days of enactment (i.e., by October 18), to impose an additional tariff of up to 100% on all goods imported into the United States from three categories of countries described in section 113(c):
Importantly, the natural gas portion of this authority includes an exception stating that no additional tariffs will be imposed on a country described in the second category above (“Natural Gas”) if two conditions are met: (i) the country’s total imports of Russian-origin natural gas during the relevant 12-month period represent less than 15% of Russia’s total natural gas exports; and (ii) the country has taken significant steps to reduce its imports of Russian-origin natural gas.
With respect to the third category of countries (“Sanctions Evasion”), the Act defines “countries facilitating Russian oil sanctions evasion” to mean countries in which foreign persons are located, operating, or organized if such persons knowingly engage in activities that “circumvent, or assist any third party to circumvent, any sanction related to” Russian oil. A non-exclusive list of these activities includes providing “significant financial support” or other support for the purchase, loading, or shipment of Russian oil that is “subject to sanctions,” and engaging in any activity “related to a shadow fleet vessel that transported, is transporting, or is attempting to transport oil” from Russia that is “subject to sanctions.”
After the initial imposition of tariffs under section 113, the U.S. Trade Representative is directed to increase or decrease, as appropriate, the tariffs to a rate greater than 0% and up to 100% upon submitting a written determination to Congress that a country subject to tariffs under section 113 has taken significant steps to either increase or decrease its importation, sale, supply, transfer, or purchase of Russian-origin crude oil or natural gas.
Additionally, within 180 days of imposing higher tariffs under section 113, and every 180 days thereafter, the U.S. Trade Representative is directed to determine, based on the most recent 12-month period prior to the determination, the countries that are the top five largest importers by volume of Russian-origin crude oil and natural gas, and impose a tariff of up to 100% (in addition to any other duties, fees, taxes, or charges) on all goods imported into the United States from such countries. The record of Senate consideration of the bill makes clear that if any countries drop out of the lists of the top five importers, duties imposed upon them pursuant to section 113 are to be terminated, and the countries that replaced them on the lists are to become subject to such tariffs.
No later than 10 days before imposing any duties or modifications under section 113, the President or U.S. Trade Representative shall submit to Congress a written justification that provides (i) a substantive rationale for the tariff rate applied; and (ii) the methodology used to determine that a subject country is a country described in section 113(c). While not a substantive condition or other restriction on the President’s ability to impose tariffs, this provision appears to be designed to mitigate the potential for arbitrary country designations or variations in tariff levels.
Although the determination of which countries will be subject to the new tariffs under section 113 will be made by the Administration, under the process outlined in section 113(g), indications have emerged[2] that the Senate negotiators believed that the definitions they had developed for the three categories of countries to be subject to higher duties would initially encompass the following countries:
Russia-Related Sanctions Authorities
In addition to the tariff authorities described above, the Graham Act codifies and creates a wide range of Russia-related sanctions authorities. These include: (1) the codification in statute of all existing sanctions designations and other measures imposed pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (and related executive orders); (2) a requirement that the President impose sanctions on a range of Russian government officials and on foreign persons and vessels determined to engage in specified Russia-related activities; (3) a requirement that the President impose sanctions against certain Russian financial institutions and foreign financial institutions that engage in significant transactions with them; (4) a requirement that the President impose sanctions targeting entities determined to be owned or controlled by, or affiliated with, the Russian government; and (5) prohibitions on certain Russia-related activities of U.S. persons. Although these sanctions criteria and prohibitions are wide-ranging, the Act also includes a broad and highly discretionary presidential waiver authority.
The Act provides that all sanctions and other measures imposed under the national emergency declared in Executive Order 14024 “shall remain in effect,” including all existing designations as of September 17, 2026. See sec. 102(d).
Like a comparable provision (at section 222) of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) addressing the earlier series of Ukraine-related sanctions, this provision effectively codifies the current Russia sanctions imposed through executive order — including Executive Orders 14024 (as amended by E.O. 14114), 14039, 14066, 14068, and 14071 — preventing the President from de-listing persons sanctioned pursuant to these orders, terminating relevant prohibitions, or otherwise unwinding the existing sanctions regime without satisfying the Act’s waiver or termination requirements, described below.
The Graham Act includes a series of provisions that the President “shall” impose sanctions against certain individuals, entities, and vessels within 30 days of enactment. These include sanctions on specified senior Russian government officials, persons determined to engage in certain Russia-related activities, and vessels engaged in certain sanctions circumvention. They also include sanctions on certain Russian financial institutions, foreign financial institutions, and Russian government-affiliated entities.
The Act requires the President, within 30 days of enactment and every 180 days thereafter, to conduct a review of persons and vessels that are eligible for sanctions as described in section 102(b). Following the review, the President is required to impose property-blocking sanctions pursuant to the International Emergency Economic Powers Act (“IEEPA,” 50 U.S.C. §§ 1701 et seq.), as well as certain visa-related sanctions, on any persons the President determines are described in the relevant criteria. The President is also required to identify as blocked property any vessels that the President determines are described in these criteria.
While these sanctions are framed as mandatory — the Act specifies that the President “shall” impose them — the need for presidential determinations before sanctions are imposed vests the President, as a practical matter, with substantial discretion as to whether and against whom to impose sanctions, other than with respect to the Russian government officials and financial institutions specifically listed in the statute, many of whom are already subject to comprehensive property-blocking sanctions.
Persons and vessels described as eligible for sanctions under section 102(b) include:
- Various named officials within the Russian government, as well as any other senior Russian government officials identified by the President;
- Any foreign person that knowingly sells, leases, or provides, or facilitates selling, leasing, or providing, goods or services relating to Russia’s defense industrial base (including certain specified goods, as well as additional goods the Secretary of State determines are “critical to the defense industrial base” of Russia), or that knowingly facilitates deceptive or structured transactions to provide such goods and services;
- Any foreign person that knowingly conducts a significant transaction with Russia’s Armed Forces;
- Any foreign person that knowingly engages, directly or indirectly, in certain activities aimed at harming Ukraine, its government, or its people;
- Any foreign person who is a leader, official, senior executive officer, board member of, or principal shareholder with a controlling or majority interest in an entity that is operating in the defense industrial base or energy or transportation sectors of the Russian economy in support of Russia’s Armed Forces;
- Any foreign person who is an oligarch in Russia and who has not demonstrated opposition to Russia’s war on Ukraine or who continues after enactment of the Act to benefit from an association with the Russian government;
- Any foreign person that is engaged in, responsible for, or complicit in certain activities for or on behalf of, or for the benefit of, directly or indirectly, the Russian government, including (i) transnational crime, corruption, bribery, extortion, or money laundering; (ii) assassination or other unlawful killing or harming of U.S. or allied persons; (iii) activities that undermine the peace, security, political stability, or territorial integrity of the United States or its allies; or (iv) deceptive or structured dealings that circumvent U.S. sanctions, including through the use of digital currencies or assets or the use of physical assets;
- Any foreign person who is a leader, official, senior executive officer, board member of, or principal shareholder with a controlling or majority interest in (i) the Yamal Liquefied Natural Gas Project; (ii) the Arctic 1, 2, or 3 Liquefied Natural Gas Projects; or (iii) any Russian energy projects in the Arctic carried out after enactment of the Act;
- Any foreign vessel determined to be used by the Russian government or Russian persons to move energy products or other goods for purposes of circumventing sanctions imposed by the United States or other countries, including any vessel the owner, operator, or manager of which knowingly (i) exhibits or engages in unsafe maritime behavior in furtherance of transporting Russian-origin energy products; (ii) lacks adequate maritime insurance for the transport of Russian-origin energy products; or (iii) evades compliance with the Russian crude oil or petroleum products price cap;
- Any foreign person that owns, operates, manages, captains, leads, or provides underwriting services or insurance (including reinsurance) for such a vessel described above, or any foreign person that transfers to Russia or any Russian person a vessel designed for the transport of energy products;
- Any foreign vessel that transports Russian-origin crude oil, uranium, natural gas, liquefied natural gas, petroleum, petroleum products, petrochemical products, coal, or coal products, engages in the ship-to-ship transfer of these Russian-origin energy products, or provides services to any such vessel;
- Any foreign person that is the owner or operator of a foreign port that allows a vessel subject to U.S. sanctions for supporting Russia to port or otherwise receive services; and
- Any foreign person that receives property or an interest in property from a person sanctioned pursuant to the Act after the date that the transferor was sanctioned, or prior to that date if the transfer was made to evade the imposition of sanctions.
Through several of the provisions above, the Act introduces novel approaches to traditional sanctions designations. For example, the Act requires the President to block certain vessels directly, rather than relying on the traditional approach of treating vessels as the blocked property of their designated owners or operators. This approach provides a more direct statutory basis for targeting the so-called “shadow fleet” without the need to first establish the vessel’s ownership nexus to a designated person (which has sometimes proved difficult for vessels owned by opaque and frequently changing shell companies).
In addition, in determining whether a vessel falls within the scope of section 102(b)(3), the Act permits the President to “use as prima facie evidence that the vessel is subject to sanctions imposed by the United Kingdom, the European Union, the Group of 7, or a member of the Five Eyes intelligence alliance.” This provision is unusual in that it expressly authorizes the President to rely on the sanctions determinations of allied governments as a sufficient evidentiary basis for U.S. designations.
The Act requires that, within 30 days of enactment, the President impose two or more of three specified sanctions on the Russian Central Bank and impose all three specified sanctions on Sberbank, VTB Bank, Gazprombank, and “any other financial institution organized under the laws of the Russian Federation and owned in whole or in part by the Government of the Russian Federation.” The Act also requires the President to impose such sanctions on any foreign financial institution that engages in significant transactions with any of the aforementioned entities (except for the Russian Central Bank), unless doing so would be inconsistent with U.S. economic or foreign policy interests. See sec. 103.
The three sanctions specified in this provision are (i) property-blocking sanctions pursuant to IEEPA; (ii) two or more of the sanctions described in section 235 of CAATSA that are not already imposed[3]; and (iii) certain restrictions on opening or maintaining in the United States correspondent and payable-through accounts.
Of note, all three of Sberbank, VTB Bank, and Gazprombank are already subject to property-blocking sanctions under the existing Russia- and/or Ukraine-related sanctions authorities, and VTB Bank was recently sanctioned by the Trump Administration for its involvement in Iranian sanctions evasion. The Russian Central Bank is not currently designated for property-blocking sanctions, but is already subject to very broad prohibitions pursuant to Directive 4 under Executive Order 14024 that have “immobilized” the assets of that bank in the United States.
Additionally, the President is required to impose property-blocking and visa-related sanctions on any leader, official, senior executive officer, board member of, or principal shareholder with a controlling or majority interest in the financial institutions sanctioned pursuant to the authority above.
The President is required, within 30 days of enactment and every 180 days thereafter, to impose property-blocking sanctions on any entity in which the President determines that the Russian government has a controlling or majority ownership interest, or with which the Russian government is otherwise affiliated. See sec. 104.
The Graham Act also imposes several Russia-related prohibitions on the activities of U.S. persons, either codifying existing IEEPA-based prohibitions that have been implemented pursuant to earlier executive orders or imposing new ones:
- Transfers of Funds: Prohibits a depository institution, or a broker or dealer in securities registered with the SEC, from processing funds transfers to or from the Russian government (including any entity owned by the Russian government) or for the direct or indirect benefit of Russian government officials, subject to certain exceptions. This is a new prohibition. See sec. 105.
- Listing or Trading of Russian Securities: Requires the SEC to prohibit trading on U.S. national securities exchanges of the securities of any issuer that is an official or individual affiliated with the Russian government, or an entity in which the Russian government has a controlling or majority interest or that is otherwise affiliated with the Russian government. This is a new prohibition. See sec. 106.
- New Investment in Russia: Prohibits U.S. persons, wherever located, from making new investments in Russia. It also prohibits U.S. persons from providing certain categories of services (to be determined by the Secretary of the Treasury) to any person located in Russia. This codifies existing prohibitions that have been established in prior executive orders. See sec. 107.
- Energy Exports or Investment in Russia: Prohibits U.S. persons from making any new investment in the Russian energy sector (codifying a pre-existing prohibition), and from exporting, reexporting, or transferring (in-country) to or within Russia any U.S.-origin energy or energy product (which is a new prohibition). It also authorizes the imposition of property-blocking and visa-related sanctions on any foreign person that the President determines knowingly provides goods, services, technology, or other support to facilitate the maintenance or expansion of production of energy products for use by any persons subject to sanctions under sections 102 or 103. See sec. 108.
- Purchase of Sovereign Debt: Prohibits U.S. persons from purchasing Russian sovereign debt (which codifies a pre-existing prohibition). See sec. 109.
- Financial Messaging Services: Authorizes the President to impose property-blocking sanctions on any person determined to be (i) an entity that provides global financial messaging services and is knowingly used to circumvent sanctions imposed under the Act; or (ii) a leader, official, senior executive officer, board member of, or principal shareholder with a controlling or majority interest in any such entity. This provision includes important exceptions for an entity that either (i) is subject to a sanctions regime that the President has determined is “not inconsistent” with U.S. policy interests, requires the entity to eliminate the knowing provision of or access to financial messaging services to financial institutions identified under that regime, and pursuant to which the entity has in fact terminated the knowing provision of such services; or (ii) has been determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be an entity that “provides significant financial messaging services to United States financial institutions.” See sec. 110.
- Russian-Origin Uranium: Directs the President to take all necessary steps to implement existing statutory restrictions under the USEC Privatization Act (42 U.S.C. § 2297h–10a(d)) on the importation of Russian uranium, including from Rosatom State Atomic Energy Corporation (“Rosatom”).[4] Additionally, beyond these prohibitions, beginning on January 1, 2028, and every 180 days thereafter, the President shall impose property-blocking and visa-related sanctions on any leader, official, senior executive officer, board member of, or principal shareholder with a controlling or majority interest in Rosatom. See sec. 111.
The Act lays out various exceptions to the sanctions it imposes, including for humanitarian assistance (such as transactions for the provision of agricultural commodities, food, medicine, and medical devices), compliance with international obligations, compliance with civilian nuclear cooperation agreements, certain imports of low-enriched uranium for nuclear reactors, non-Russian oil that transits Russian territory and the entity that transports such oil for export to international markets, vessel and crew safety, and NASA activities, among others. See sec. 114.
The Act also includes an exception to the imposition of sanctions for U.S. persons operating under the terms of a general license issued by the U.S. Department of the Treasury prior to the date of enactment, and further clarifies that nothing in the Act should be construed to affect the terms of any such general license or the authority of the Secretary of the Treasury to extend or issue new general licenses.
The Act provides for a 270-day wind-down period, beginning on the date of enactment, during which the Graham Act’s sanctions and prohibitions do not apply to activities related to the wind-down or divestiture of operations in Russia by (i) an entity located in Russia that is not owned or controlled, directly or indirectly, by a Russian person; or (ii) an entity located in Russia that is owned or controlled, directly or indirectly, by a U.S. person, if that U.S. person is engaged in good-faith efforts to wind down or divest operations in Russia.
The Act includes a broad presidential waiver authority for “any sanctions provision with respect to a foreign person, any restriction with respect to a person, or any duty under” the Russia-related portion of the Act. See sec. 115. The only requirement for waiving such sanctions, restrictions, or duties is that, prior to issuing any such waiver, the President must submit a report to Congress certifying that the waiver is in the “national interests of the United States,” and explaining the basis for that determination. The Act includes no limitation on the duration of such waivers.
The Act also authorizes the President to terminate the application of any sanction, restriction, or duty under the Graham Act if the President submits a termination report to Congress. See sec. 117. With respect to sanctions, restrictions, or duties on Russia or Russian persons, the termination report must certify that Russia has signed a peace agreement that is accepted by a free and independent Ukrainian Government and has ceased all military hostilities against and activities to overthrow, dismantle, and subvert the Ukrainian Government.
With respect to sanctions, restrictions, or duties on non-Russian persons or countries, the report must certify that the foreign person or government is not engaging in the activity that was the basis for the sanctions or other measures, and that the President has received reliable assurances that the person or government will not knowingly engage in such activity in the future. These latter termination criteria are similar to those included in comparable provisions of CAATSA.
Congress will generally have 30 calendar days to review any such termination report; if, prior to the end of the review period, Congress enacts into law a joint resolution of disapproval, the termination will not take effect. Given the breadth and flexibility of the waiver authority in section 115, however, the comparatively high bar for full termination of sanctions may not have significant practical effect.
Extension of Iran Sanctions Act Sunset Date
In addition to the Russia-related provisions described above, Title II of the Graham Act amends the existing sunset date of the Iran Sanctions Act of 1996, extending it from December 31, 2026 to December 31, 2031. The widely expected five-year extension ensures continuity of the longstanding statutory framework providing for the imposition of U.S. secondary sanctions on persons engaged in certain Iran-related transactions.
We are closely monitoring developments related to the implementation of the Act and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.
Covington’s International Trade Controls and International Trade Policy teams — which include lawyers in the firm’s offices in the United States, London, Brussels, and Frankfurt — regularly advise clients across business sectors and would be well placed to provide support in connection with these developments. Our trade lawyers also work regularly with Covington’s Global Public Policy team — consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia — many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders.
If you have any questions concerning the material discussed in this client alert, please contact the following members of our International Trade Controls and International Trade Policy practices.
[1] There appears to be a timing disconnect between section 113(a), which requires the President to impose higher duties on all three categories of countries within 30 days of enactment, and section 113(c)(1)(A), which provides that the composition of the first two of these categories will depend in part on whether the countries “knowingly made new purchases of crude oil or natural gas that originated in the Russian Federation on a date that is on or after 30 days after the date of enactment.” It remains to be seen how the Administration will deal with this disconnect in implementing the legislation.
[2] See, e.g., Andrew Desiderio (@AndrewDesiderio), X (Sept. 15, 2026, at 6:32 PM), https://x.com/AndrewDesiderio/status/2099989794759553534?s=46.
[3] The sanctions described in section 235 of CAATSA include: (1) loss of U.S. Export-Import Bank assistance; (2) ineligibility to receive U.S. export licenses; (3) loss of access to certain loans or credit from U.S. financial institutions; (4) loss of U.S. support for loans from international financial institutions; (5) for financial institutions, a prohibition on being designated as a primary dealer, or serving as a U.S. government agent or as a repository for U.S. government funds; (6) ineligibility to contract with the U.S. government; (7) ineligibility to engage in transactions in foreign exchange that are subject to U.S. jurisdiction; (8) loss of access to U.S. financial markets; (9) prohibitions against dealings in property of the sanctioned person that is within U.S. jurisdiction; (10) prohibitions against U.S. persons investing in or purchasing significant amounts of debt or equity of the sanctioned person; or (11) exclusion from the United States of any alien that the President determines is a corporate officer or principal of, or a shareholder with a controlling interest in, the sanctioned person. The foregoing measures also may be applied to the principal executive officer(s) of the sanctioned person.
[4] Under section 3112A(d)(2)(C) of the USEC Privatization Act, any waivers of that Act’s prohibitions on imports of low-enriched uranium produced in Russia or by a Russian entity are required to terminate no later than January 1, 2028.
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