US Report Identifies India in 'Shadow Network' Aiding China's Tariff Evasion

A White House report has named India as a significant component of a "shadow transhipment network." This network allegedly facilitates the rerouting of Chinese goods through third countries to evade high US tariffs imposed under the Trump administration. The report, titled “Great Transhipment Scam,” suggests this practice could be costing the US government tens of billions in lost tariff revenue.

What Happened

The issue originated in 2018 when the US implemented Section 301 tariffs on certain Chinese products to address a growing trade deficit. According to the report, Chinese exporters began sending goods through other nations. In these third countries, minimal activities such as limited assembly, finishing, repackaging, relabeling, or documentation alterations were performed to create the appearance of a different national origin for the goods.

Key Facts

• A White House report has identified India as part of a "shadow transhipment network" facilitating Chinese tariff evasion.
• The report, titled “Great Transhipment Scam,” estimates the value of potentially illegal transhipment at roughly $60 billion.
• The problem began in 2018 when the Trump administration imposed Section 301 tariffs on Chinese goods.
• Around 40 countries are reported to play a role in this network, categorized into three tiers.
• India, along with Canada, Japan, the European Union, Israel, and Mexico, is placed in Tier 1.
• One estimate suggests approximately $67 billion in US-bound goods were transshipped from China through hubs including Mexico, India, and Vietnam in 2025, potentially losing an estimated $28 billion in tariff revenue.
• The report estimates that transshipped Chinese goods could displace approximately 450,000 jobs, reduce annual GDP by $113 billion to $150 billion, and cause federal revenue losses of $19 billion to $26 billion annually.
• The report highlights the Pune–Gujarat–Chennai corridor in India as benefiting from transshipped electric pumps and compressors at the expense of US manufacturers in Ohio.
• The report calls for actions such as interdiction, penalty tariffs, sanctions, and potential loss of market access against countries enabling this rerouting.

Why It Matters

The report claims that the economic pressure on US manufacturers from these transshipped Chinese goods has led to significant economic consequences. These include an estimated displacement of 450,000 jobs, a reduction in annual gross domestic product between $113 billion and $150 billion, and federal revenue losses ranging from $19 billion to $26 billion annually. Specific corridors within India, such as Pune–Gujarat–Chennai, are cited as benefiting from the transshipment of products like electric pumps and compressors, negatively impacting US manufacturers in cities like Cincinnati, Dayton, and Columbus, Ohio.