A new US report has alleged that India is among 40 countries that are helping China evade Trump’s tariffs with the help of a shadow trans-shipment network. The White House on August 13, 2026, released a 25-page report titled The Great Transshipment Scam: Rise, Scope, and Costs, alleging that Chinese exporters are routing goods through more than 40 countries to bypass higher US tariffs.Prepared by the White House Office of Trade and Manufacturing Policy under Peter Navarro, the report argues that while the Section 301 tariffs introduced against China in 2018 reduced direct Chinese exports to the United States, they also gave rise to a worldwide transshipment network.According to the report, Chinese products are being relabelled, repackaged, re-invoiced or subjected to limited processing in countries facing lower US tariff rates before being exported to the United States under a different country of origin. The report describes this system as the “Shadow Transshipment Network.”To illustrate the scale of the issue, the report cites five separate estimates of annual transshipment or related exposure: $40 billion from Goldman Sachs, $60 billion from the White House Council of Economic Advisers, $75 billion from Exiger, $109 billion from the US Commerce Department and $303 billion from Altana. It also notes that these estimates are based on different methodologies and therefore cannot be directly compared.
India named
The report classifies more than 40 countries into three separate tiers based on their alleged role in transshipment activities. India has been placed in Tier 1, labelled “Diversified Scale Leaders”, alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan. According to the report, these economies possess large industrial manufacturing bases where alleged transshipment risks are intertwined with legitimate trade flows.Tier 2, described as “Significant Economic Integration with China”, comprises Brazil, Indonesia, Malaysia, Thailand, Turkey and Vietnam. Tier 3, labelled “Small, Opportunistic Targets”, includes Bangladesh, Cambodia, the Philippines, Singapore, Sri Lanka and the UAE.During a media briefing, senior White House trade adviser Peter Navarro specifically referred to India while cautioning that countries could attempt to circumvent higher US tariffs through transshipment as Washington expands its tariff measures.“This is about the 40-plus countries that are enabling the transshipping, and as we impose higher tariffs on other countries, India, Vietnam, down the line, they’re going to try this transhipment too. Our message is simply that the way to pay less is not to cheat; it is to stop dumping, respect intellectual property, drop your barriers to American goods and move towards reciprocity. Our warning to the lower tariff countries facilitating and enabling the transshipping is this: preferential access to the American market is not a license to launder somebody else’s exports,” said Navarro.The report refers to a US Commerce Department estimate that goods worth $67 billion were transshipped through India, Mexico and Vietnam in 2025, resulting in tariff losses of $28 billion. However, it does not specify India’s share of that estimate, identify any Indian exporter or provide details of a single fraudulent shipment.According to the Global Trade Research Initiative (GTRI), the report also singles out India’s Pune-Gujarat-Chennai manufacturing corridor for products classified under HS codes 8413-8414, covering pumps and compressors.However, an analysis by GTRI indicates that India has significant domestic manufacturing capability in these product categories.During FY2026, India exported liquid pumps worth $1.61 billion worldwide, including shipments worth $414.5 million to the United States, while importing liquid pumps valued at $326.4 million from China. Similarly, India exported air pumps and gas compressors worth $1.48 billion globally, of which $335.4 million went to the US, even as imports from China stood at $1.63 billion.Given the scale of India’s worldwide exports in these sectors, GTRI argues that it is difficult to assume that shipments to the United States merely consist of Chinese products being rerouted through India.
Trump tariff failure?
According to GTRI, the new report is a way of shifting focus away from tariff outcomes of the Donald Trump administration.Although US imports from China declined from $525.8 billion in 2017 to $327.5 billion in 2025, America’s overall imports continued to rise, increasing from $2.41 trillion to $3.50 trillion over the same period.“The US therefore replaced many Chinese finished goods with imports from other countries rather than with domestic production. Trump’s tariffs changed the source of imports but failed to reduce America’s overall dependence on imported goods,” says GTRI founder Ajay Srivastava.China, meanwhile, appears to have adjusted its export strategy. Instead of relying primarily on direct exports of finished goods to the United States, it has increasingly supplied components and intermediate products to manufacturers in countries such as Mexico, Vietnam, India and several European and Asian economies. These inputs are then processed, assembled or incorporated into finished products before being exported to the US, notes GTRI.“Where such processing results in substantial transformation, these are genuine exports of the manufacturing country and an established feature of global value chains. They cannot be treated as Chinese transshipment merely because they contain Chinese inputs. China has, in effect, responded to US tariffs by strengthening its position as a global supplier of intermediate goods,” GTRI says.The report also points out that aggregate trade figures do not, by themselves, establish widespread rerouting of Chinese exports. Chinese imports may be used for domestic consumption, genuine manufacturing activity or exports to destinations other than the United States.
GTRI identifies 4 key shortcomings
According to GTRI, the report suffers from four major weaknesses.First, it broadens the conventional definition of transshipment, which ordinarily refers to cargo being unloaded and reloaded without alteration, to include activities such as assembly, testing, finishing and component integration. In doing so, it conflates genuine manufacturing with origin fraud and risks portraying legitimate production within global supply chains as transshipment without first establishing any violation.Second, the report relies on trade correlations as evidence. A reduction in direct imports from China accompanied by rising imports from another country does not, by itself, demonstrate that the same goods were simply relabelled and rerouted.Third, GTRI argues that it is the United States’ own country-specific tariff structure that has created the large tariff differentials making evasion financially attractive.Fourth, although the United States already applies non-preferential rules of origin based on the principle of substantial transformation, the report argues that these rules remain complex, inconsistent and susceptible to misuse, while recommending stricter statutory standards.
What India should do
India should seek evidence and conduct its own verification, says Ajay Srivastava.GTRI says India should ask the United States to disclose the detailed basis of its allegations, including country-specific, product-level and shipment-level data, as well as India’s share of the estimated $67 billion in alleged transshipped goods.It also recommends that India independently examine exports of pumps and compressors by comparing firm-level imports from China with exports to the United States and verifying the extent of domestic value addition. Such an exercise would help identify any misuse, safeguard compliant exporters and enable India to contest unsubstantiated allegations with credible evidence.
