Hyderabad: India has been named in a Tier 1 grouping of countries flagged by the White House over the alleged rerouting of Chinese goods into the American market to dodge higher US tariffs, in a report that could sharpen scrutiny of Indian shipments even as New Delhi and Washington work towards a trade deal.
The report, “The Great Transshipment Scam,” released by the White House Office of Trade and Manufacturing Policy, identifies more than 40 countries as part of what it calls a “shadow transshipment network.”
India is placed in the top tier, called “Diversified Scale Leaders”, along with Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan. These are large trading economies where, the report says, the risk of rerouting is hidden inside big volumes of genuine trade.
Pune-Gujarat-Chennai corridor named
The report names the Pune-Gujarat-Chennai industrial belt as a staging point for pumps and compressors, and pairs it with factories in the Ohio cities of Cincinnati, Dayton and Columbus. It calls such pairs “ugly sister cities,” which is a foreign hub handling suspect China-linked goods on one side, and on the other, the American towns that make the same products and lose the orders.
Illegal transshipment, as defined in the report, involves relabelling, repackaging, re-invoicing, minor processing or false country-of-origin claims intended to secure tariff treatment that would not apply if the true economic origin of the goods were declared. The practice took hold after Washington imposed Section 301 duties on Chinese goods in 2018, it says.
Citing Commerce Department estimates, the report says roughly USD 67 billion worth of US-bound goods were transshipped from China through three leading hubs, Mexico, India and Vietnam, in 2025, costing the US exchequer about USD 28 billion in tariff revenue. Its wider estimates of annual illegal transshipment range from USD 40 billion to USD 303 billion, drawn from five separate government and private assessments.
India well on our radar: US
White House trade adviser Peter Navarro, who championed the report, named India directly at a briefing. “As we impose higher tariffs on other countries, India, Vietnam, down the line, they’re going to try this transhipment too,” he said, adding that preferential access to the American market was not a licence to launder another country’s exports.
Navarro said India was “well on our radar,” describing the practice as a modern form of smuggling involving over 40 countries.
The timing comes at an awkward time. India and the US are negotiating an interim reciprocal trade agreement and the framework announced in February carried commitments on rules of origin so that the benefits accrue mainly to the two countries. The final agreement is yet to be signed and the latest assessment could make those origin rules tougher.
For Indian exporters using Chinese components, that could translate into having to document more clearly the extent of processing or value addition carried out in India before goods qualify as Indian-origin, raising compliance costs and customs risk on US-bound consignments.
Navarro has also warned that importers found to have misdeclared origin could face tariffs retrospectively, covering shipments going back roughly a year.
The report proposes an artificial intelligence (AI)-enabled “Detective Border” to help US Customs and Border Protection sift legitimate nearshoring from pass-through trade.
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