US flags India as part of ‘shadow transhipment network’ helping China evade Trump tariffs

A White House report has identified India as a major hub in a global “shadow transhipment network” that allegedly allowed Chinese goods facing high US tariffs to enter the American market through third countries with lower tariff rates.

The report, titled The Great Transhipment Scam, estimates that potentially illegal transhipment could be worth around $60 billion, resulting in tens of billions of dollars in lost US tariff revenue. It was prepared by White House adviser Peter Navarro.

The report calls for tougher action against countries that facilitate the rerouting of tariffed Chinese goods, including immediate interdictions, penalty tariffs, sanctions and possible loss of access to the US market.

The findings come amid growing strains in India-US relations. The report was released six days after the US Senate voted 86-11 to approve legislation authorising tariffs of up to 100% on countries, including India, that purchase Russian oil, gas and other exports.

The legislation allows the US administration to target China, India, Slovakia, Hungary and Azerbaijan. Its sponsors said tariffs should be high enough to discourage Chinese and Indian purchases of Russian energy. India was previously hit with an additional 25% levy in August last year, which was later removed following trade negotiations as the two countries sought to reach a trade agreement.

According to the White House report, the transhipment network emerged after the Trump administration imposed Section 301 tariffs on selected Chinese products in 2018 to address the US trade deficit with China.

“After their imposition, Chinese exporters increasingly routed goods through third countries,” the report said, describing how products were allegedly shipped through countries where limited assembly, finishing, repackaging, relabelling or documentation changes could make them appear to have a different country of origin.

The report identifies around 40 countries as key participants in the network and divides them into three tiers according to their role in facilitating the movement of Chinese-origin goods into the US at lower tariff rates.

India, along with major US trading partners including Canada, Japan, the European Union, Israel and Mexico, has been placed in Tier 1.

Citing US Commerce Department data, one estimate in the report says around $67 billion worth of US-bound goods were transhipped from China through three major hubs — Mexico, India and Vietnam — in 2025, allegedly resulting in about $28 billion in lost tariff revenue.

The report argues that the flow of Chinese goods through third countries has increased pressure on US manufacturers and caused wider economic losses. Under a central estimate of $75 billion in annual illegal transhipment, it projects 450,000 jobs displaced, a $113 billion-$150 billion reduction in annual US GDP and $19 billion-$26 billion in federal revenue losses.

The White House stressed that these figures are model-based estimates rather than observed job losses.

The report also claims that specific Indian trade corridors have benefited economically from Chinese transhipment at the expense of US manufacturers. It cites the Pune-Gujarat-Chennai corridor as an example, alleging that Chinese electric pumps and compressors routed through India have benefited businesses there while hurting manufacturers in Ohio cities including Cincinnati, Dayton and Columbus.