The United States has named India among more than 40 countries and economies that Washington says face elevated risks of being used as part of a global network for evading US tariffs on Chinese goods. The allegations are detailed in a new White House report titled “The Great Transshipment Scam.”
The report alleges that Chinese exporters have increasingly routed goods through third countries before shipping them to the US, allowing products to appear as though they originated somewhere other than China. According to the US administration, methods can include relabelling, repackaging, reinvoicing, minor processing and changes in shipping routes or documentation.
India Classified in Top-Risk Tier
India has been placed in Tier 1, described by the White House as “Diversified Scale Leaders.” The group also includes Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan.
However, the classification does not mean that the US has accused the Indian government or all Indian exporters of deliberately participating in illegal tariff evasion. Instead, the report says countries in this category have large and diversified industrial bases, significant trade with China and major export platforms serving the US market, making transshipment risks difficult to separate from legitimate trade.
Pune-Gujarat-Chennai Belt Flagged
The report specifically points to India’s Pune-Gujarat-Chennai production corridor, saying it can absorb China-linked products and feed them into legitimate-looking supply chains.
US trade adviser Peter Navarro argued that Chinese products could undergo limited processing or other changes before being exported from India, potentially creating the appearance of Indian origin.
Billions at Stake
The White House estimates that the annual value of potentially illegal transshipment could range between $40 billion and $303 billion, depending on the methodology and definition used. The administration estimates that the US loses roughly $19 billion to $26 billion in tariff revenue each year because of such practices.
The report argues that tariff evasion gives Chinese manufacturers an advantage by allowing their products to reach the American market while avoiding duties imposed directly on Chinese imports.
US Plans AI-Powered Crackdown
Washington is now preparing tougher measures to identify suspected transshipment. The White House report proposes an AI-powered system referred to as “Detective Border”, which would combine shipment records, routing histories and other trade information to help US Customs identify high-risk consignments.
The US could also pursue stronger enforcement, including the collection of duties when goods are later found to have been falsely declared.
Potential Impact on India-US Trade
The move comes at a sensitive time for India-US trade relations. Increased scrutiny of Indian exports could mean more checks on the origin and manufacturing content of products entering the American market.
For Indian exporters, the development could increase compliance requirements and documentation standards. At the same time, India’s inclusion in the report does not itself impose a new tariff on Indian goods.
The report therefore represents a warning from Washington rather than a direct accusation against every country or company listed. For India, the key challenge will be ensuring that genuine Indian exports can clearly demonstrate their origin while preventing companies from being used as channels for Chinese goods seeking to bypass US trade restrictions.
