India Under US Scrutiny Over Alleged Chinese Transshipment and Tariff Evasion

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Key takeaways

A new White House report titled 'The Great Transhipment Scam' accuses India of helping Chinese exporters evade US trade tariffs.
The US estimates that USD 67 billion worth of goods were transshipped through Mexico, India, and Vietnam in 2025.
This transshipment scheme caused an estimated revenue loss of USD 28 billion for the US government.
The report categorizes India as a Tier 1 risk jurisdiction and highlights the Pune-Gujarat-Chennai production belt for absorbing Chinese goods.

The White House released a report titled 'The Great Transhipment Scam', putting India under close scrutiny.
The report claims that India and other nations help Chinese exporters illegally bypass US trade tariffs through proxy routes.

The US placed tariffs up to 100% on Chinese items under Section 301 of the Trade Act, 1974 to combat unfair trade practices.
Chinese companies responded by sending products through third countries to hide their true origin and lower tariff costs.
The report puts India in Tier 1 along with Canada, the EU, Japan, and Mexico out of more than 40 high-risk jurisdictions.
It specifically highlights the Pune-Gujarat-Chennai production belt for receiving Chinese industrial inputs.

Transshipment means shipping goods through an intermediate country where basic packaging, minimal assembly, or documentation changes make the products look locally made.
Chinese sellers use 'screwdriver factories' in third countries to do minor assembly work and bypass standard origin rules.

US officials estimate that USD 67 billion worth of goods headed to the US went through Mexico, India, and Vietnam in 2025.
This trade diversion caused an estimated USD 28 billion loss in US tariff revenue.

These allegations add fresh stress to bilateral trade between India and the United States.
This action comes right after the US imposed a 10% tariff on India over forced-labour compliance gaps.
It also coincides with proposed US laws threatening up to 100% tariffs on nations buying Russian oil.