A White House report has described India as a major part of a “shadow transhipment network” that allowed Chinese goods facing high US tariffs to enter the American market by re-routing them through third countries facing lower tariffs.
In the report titled “The Great Transhipment Scam”, US President Donald Trump’s adviser Peter Navarro estimates the value of potentially illegal transhipment at roughly $60 billion. It says this cost the US government tens of billions in lost tariff revenue.
The report calls for firm action against countries enabling the rerouting of tariffed goods to evade US law, including immediate interdiction, penalty tariffs, sanctions, and potential loss of market access.
It was released amid a downturn in India-US relations and six days after the US Senate on Friday last approved, by 86 votes to 11, a bill authorising tariffs of up to 100% on countries, including India, buying Russian oil, gas and other exports. The bill’s sponsors named India as one of five target economies even as US allies in Europe were left out of its ambit despite similar purchases.
The bill permits the executive to act against China, India, Slovakia, Hungary and Azerbaijan. Its sponsors said the rate should be pitched high enough to deter Chinese and Indian buying. India was slapped with a 25% additional levy in August last year, which has since been removed after trade negotiations. India and the US have been attempting to seal a trade deal.
The White House report traces the origins of the “shadow transhipment network” to 2018, when the Trump administration imposed Section 301 tariffs on select Chinese goods to remedy America’s growing trade deficit with China. “After their imposition, Chinese exporters increasingly routed goods through third countries. Products that previously moved directly from China to the United States were shipped through jurisdictions where limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin,” the report says.
The report identifies roughly 40 countries worldwide playing a key role in enabling this “transhipment network”. It sorts them into three tiers based on the extent to which they enable the movement of Chinese-origin goods into the US at lower tariff rates. India and other major US trading partners, such as Canada, Japan, the European Union, Israel, and Mexico, have been placed in Tier 1
One estimate cites American commerce department data to assert that “approximately $67 billion in US-bound goods were transshipped from China through the top hubs—Mexico, India, and Vietnam—in 2025, producing an estimated $28 billion in lost tariff Revenue.”
The report says that increased economic pressure on US manufacturers from transshipped Chinese goods has led to serious economic consequences for America. Under a central case of $75 billion in annual illegal transhipment, the report estimates approximately 450,000 jobs displaced; $113 billion to $150 billion in reduced annual gross domestic product; and $19 billion to $26 billion in associated federal revenue losses. These figures are model-based estimates rather than observed job counts, it says.
The report says enabling US goods to enter the Chinese market at lower tariff rates has allowed specific corridors within India to benefit economically at the expense of their American counterparts. It points to the Pune–Gujarat–Chennai corridor as one that has benefited from Chinese transhipment of electric pumps and compressors while hurting US manufacturers in cities like Cincinnati, Dayton, and Columbus in Ohio.
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