The US has named India as a major part of what it calls a “shadow transhipment network” that helped Chinese goods facing high tariffs enter the American market through third countries with lower tariff rates.
A White House report titled “The Great Transhipment Scam” estimates that potentially illegal transhipment was worth around $60 billion. It says the practice resulted in tens of billions of dollars in lost US tariff revenue.
India placed in top tier
The report identifies around 40 countries that it says play a role in moving Chinese-origin goods into the US at lower tariff rates. These countries have been divided into three tiers based on the extent of their involvement.
India has been placed in Tier 1, alongside major US trading partners including Canada, Japan, the European Union, Israel and Mexico.
The report cites US Commerce Department data to estimate that “approximately $67 billion in US-bound goods were transshipped from China through the top hubs—Mexico, India, and Vietnam—in 2025, producing an estimated $28 billion in lost tariff Revenue.”
According to the report, Chinese exporters began increasingly using third countries after the Trump administration imposed Section 301 tariffs on selected Chinese products in 2018.
“After their imposition, Chinese exporters increasingly routed goods through third countries. Products that previously moved directly from China to the United States were shipped through jurisdictions where limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin,” the report says, as cited by Hindustan Times.
Report seeks tougher action
The White House report has called for stronger action against countries it believes facilitate such rerouting. Proposed measures include immediate interdiction, penalty tariffs, sanctions and possible loss of access to the US market.
It estimates that a central case of $75 billion in annual illegal transhipment could be linked to around 450,000 displaced jobs, a $113 billion-$150 billion reduction in annual GDP and $19 billion-$26 billion in associated federal revenue losses. The report clarifies that these are model-based estimates rather than observed job counts.
India-US ties under pressure
The report comes as India-US relations face fresh strains. Six days earlier, the US Senate approved an 86-11 vote on legislation authorising tariffs of up to 100 per cent on countries buying Russian oil, gas and other exports.
India was among the five economies named by the Bill’s sponsors, along with China, Slovakia, Hungary and Azerbaijan.
India had earlier faced an additional 25 per cent US levy, which was later removed following trade negotiations. New Delhi and Washington have also been working towards a trade deal.
The report specifically points to the Pune–Gujarat–Chennai corridor, alleging that Chinese transhipment of electric pumps and compressors has benefited parts of India while hurting US manufacturers in cities including Cincinnati, Dayton and Columbus in Ohio.