A newly released White House report has identified India as a primary node in a global “shadow transhipment network,” which allegedly enables Chinese exporters to bypass steep US tariffs by rerouting goods through third-party nations. Compiled by presidential adviser Peter Navarro and titled The Great Transhipment Scam, the report estimates illegal transhipments at roughly $60 billion, resulting in massive losses in federal tariff revenue.
Background and Tariff Evasion Tactics:
The origins of the issue date back to 2018, when the Trump administration initially levied Section 301 tariffs on select Chinese imports to combat the bilateral trade deficit. According to the document, Chinese manufacturers subsequently began funneling goods through approximately 40 intermediary countries. In these jurisdictions, minor processes such as light assembly, repackaging, relabeling, or document alterations are performed to obscure the true country of origin before the items are exported to the United States.
Classification and Economic Impact:
The report categorizes nations facilitating this activity into three distinct tiers. India is grouped into Tier 1 alongside major trading partners such as Canada, Japan, the European Union, Israel, and Mexico.
Data cited in the report indicates that top transhipment hubs specifically Mexico, India, and Vietnam handled approximately $67 billion in US-bound goods originating from China in 2025 alone, generating an estimated $28 billion in uncollected tariff revenue. Econometric models within the study project that an annual volume of $75 billion in illegal transhipments could displace roughly 450,000 American jobs, reduce annual GDP by $113 billion to $150 billion, and cause up to $26 billion in federal revenue losses.
Specific Regional Corridors and Policy Responses:
The document singles out specific industrial corridors, noting that the Pune-Gujarat-Chennai manufacturing axis in India has economically benefited from the transhipment of goods like electric pumps and compressors, directly impacting competing manufacturing sectors in US cities such as Cincinnati, Dayton, and Columbus in Ohio.
The report’s release coincides with broader diplomatic friction, occurring just days after the US Senate approved a bill authorizing tariffs of up to 100% on nations purchasing Russian energy and exports, which specifically named India among five target economies. In response to these findings, the White House report advocates for aggressive countermeasures, including immediate interdiction, penalty tariffs, broad economic sanctions, and the potential revocation of US market access for non-compliant nations.
