US accuses India of helping China evade Trump tariffs through transhipment.
The United States has accused India of being part of a “shadow transhipment network” allegedly helping Chinese exporters evade US tariffs by routing goods through third countries. The allegation appears in a White House report titled “The Great Transhipment Scam,” which calls for stronger action against countries facilitating the rerouting of tariffed Chinese goods into the American market.
According to the report, potentially illegal transhipment could involve goods worth around $60 billion, costing the US government tens of billions of dollars in lost tariff revenue. Washington says Chinese exporters have increasingly used third countries to reduce the impact of US duties and gain access to American consumers at lower tariff rates.
India placed in Tier 1
India has been placed in Tier 1 alongside Canada, Japan, the European Union, Israel and Mexico. The report calls these countries “Diversified Scale Leaders,” arguing that transhipment risks can exist within their large and legitimate trade networks. However, the classification does not mean that all trade through these countries is illegal.
The White House says Chinese companies expanded transhipment practices after the Trump administration introduced Section 301 tariffs on Chinese products in 2018. Alleged methods include rerouting goods through third countries, relabelling or repackaging products, and falsely declaring their country of origin.
The report specifically points to India’s Pune-Gujarat-Chennai industrial belt, alleging that products such as pumps and compressors move through the corridor and compete with US manufacturers. It also identifies around 40 countries as important parts of the alleged transhipment network.
Possible US action
The White House report calls for stronger customs enforcement, interception of suspicious shipments, penalty tariffs, sanctions and possible restrictions on market access. Future US trade agreements could also include provisions penalising countries that facilitate tariff evasion.
The allegations come as India and the US negotiate a broader trade agreement covering tariffs, market access and regulatory issues. The controversy could complicate those talks, particularly if Washington seeks stricter origin verification and anti-circumvention measures.
Wider India-US tensions
The report also comes amid disagreements over India’s purchases of Russian energy. The US Senate recently approved legislation authorising tariffs of up to 100% on countries buying Russian oil, gas and other exports. India was among the countries identified by the bill’s sponsors as potentially facing action.
India had earlier faced an additional 25% US tariff, which was later removed following trade negotiations. The latest transhipment allegations could therefore add further pressure to already sensitive economic relations.
For India, the immediate challenge is to demonstrate that legitimate exports are not being used to disguise Chinese-origin goods. If US authorities identify specific cases of deliberate tariff evasion, companies could face additional duties, customs penalties or other enforcement measures.
The dispute highlights the growing importance of supply-chain transparency as tariffs reshape global trade. While companies increasingly source components and manufacture goods across several countries, governments are paying closer attention to whether such arrangements represent genuine production or attempts to bypass trade restrictions.
For now, the White House report signals Washington’s intention to scrutinise Chinese-linked supply chains more closely and hold third countries accountable where it believes tariff evasion is taking place. The impact on India-US trade will depend on further evidence, investigations and the response from Indian officials and businesses.