'All these reports and announcements by the US seem like attempts to gain a lever in trade deal negotiations with India.'
As Washington steps up efforts to prevent Chinese goods from circumventing US tariffs through third countries, the White House has identified India among more than 40 countries and trading jurisdictions that the US administration considers exposed to Chinese-linked transshipment risks.
'The countries that comprise China's shadow transshipment network include many of America's largest trading partners.
'China's biggest enablers range from Mexico and Canada on the US land borders to the European Union, India, Japan, and South Korea,' the White House Office of Trade and Manufacturing Policy said in a report titled The Great Transshipment Scam.
Key Points
- The White House has identified India among more than 40 jurisdictions exposed to Chinese-linked transshipment risks.
- The report singled out India's Pune-Gujarat-Chennai production belt as a potential corridor for China-linked industrial goods.
- Indian trade experts questioned the report's methodology, warning that legitimate manufacturing could be wrongly classified as transshipment.
- Exporters fear additional inspections, penalties and non-tariff barriers could further complicate India-US trade negotiations.
China Transshipment Network
The report particularly identified India's Pune-Gujarat-Chennai production belt as a potential corridor for import of China-linked pumps and compressors into the US.
Activity in this corridor affects the US' industrial supply chains based in Cincinnati, Dayton and Columbus, the report claimed.
A review of India's trade data with the US showed that the former's exports of pumps and compressors to America were around $750 million in financial year 2025-2026 (FY26), accounting for less than 1 per cent of its total shipments to the country.
Meanwhile, India's imports of these items from China were nearly $2 billion in FY26.
India's Pune-Gujarat-Chennai Corridor
Quoting estimates by the Office of Trade and Economic Analysis, the report said the US received around $67 billion worth of goods in 2025 that it estimated had been transshipped from China through hubs including Mexico, India, and Vietnam.
It estimated that this resulted in a $28 billion loss in tariff revenue.
The report did not provide an estimate for the value of goods allegedly transshipped through India alone.
The Indian government is currently reviewing the findings and the methodology adopted in the White House report.
'We would like to study the findings and the methodology adopted in detail,' Ministry of External Affairs Spokesperson Randhir Jaiswal said.
'We have robust laws and procedures governing Customs, rules of origin, and exports, and any instances of violation that may occur are dealt with in accordance with the law,' he said.
$67 Billion Transshipment Claim
The report defines illegal transshipment as the routing of goods through a third country where they may undergo minor processing, re-labelling, repackaging, re-invoicing or changes in paperwork that create the appearance of a new country of origin without substantial transformation.
According to the report, China has responded to tariffs imposed on it by Washington since 2018 by reducing direct exports to the US while encouraging the development of a global transshipment network.
The White House report has grouped the 40-plus identified economies into three tiers, and placed India in Tier-1 of 'China's Shadow Transshipment Network', alongside Canada, the EU, Israel, Japan, Mexico, South Korea, and Taiwan.
The report described the Tier-1 economies as 'Diversified Scale Leaders' that account for large absolute volumes of China-linked goods while having diversified industrial bases and major US-bound export platforms.
It stressed that in these jurisdictions, transshipment risk is embedded within broad legitimate trade flows.
India Questions US Findings
Trade experts in India remain sceptical about the findings in the White House report.
According to New-Delhi based think-tank Global Trade Research Initiative (GTRI), the report stretches the technical meaning of transshipment.
"It thereby mixes origin fraud with legitimate manufacturing. This risks presenting legitimate processing and global supply-chain production as transshipment before any violation is proved," GTRI Founder Ajay Srivastava said.
The report has proposed an artificial intelligence (AI)-enabled 'Detective Border' system to identify anomalous routing patterns, assess production capacity, and direct Customs enforcement towards high-risk shipments.
"The proposed AI-enabled "Detective Border" could lead to more inspections, shipment delays, retrospective duties and penalties," Srivastava flagged.
New Trade Barriers Loom
The report comes at a sensitive time for India-US trade: just a week after the US Senate passed a Bill that could expose India to punitive tariffs of up to 100 per cent over its purchases of Russian oil.
Additionally, the Office of the US Trade Representative has an open investigation against India under Section 301 of the US Trade Act, alleging excess capacity.
Ram Singh, head and professor at the Indian Institute of Foreign Trade, said the US had been adding "layer after layer" of uncertainty to the global trade order.
"All these reports and announcements by the US seem like attempts to gain a lever in trade deal negotiations with India as well as other economies," Singh added.
Indian exporters, however, fear that the report may lead to non-tariff barriers at a time when tariff barriers already exist.
Indian goods currently face an additional 10 per cent tariff in the US under Section 301 of the US Trade Act of 1974, with Washington having laid out multiple avenues for a further increase in tariffs.
Feature Presentation: Ashish Narsale/Rediff
