US flags India in ‘Transshipment Scam’ report.

White House accuses over 40 nations of aiding China’s tariff evasion.

The Trump administration has accused India, along with more than 40 other trading partners, of being part of what it calls the “Great Transshipment Scam.” The report, authored by Peter Navarro, senior trade advisor to President Donald Trump, alleges that China has been routing its exports through third countries to disguise their origin and avoid paying steep US tariffs.

According to the report, nations such as India, Taiwan, Mexico, Japan, South Korea, and Vietnam have become hubs for this practice. Navarro claims that Chinese goods undergo minor changessuch as repackaging, relabelling, or reinvoicingbefore being shipped to the United States, creating the illusion of a new national origin while retaining their Chinese content.

The practice reportedly intensified after 2018, when Washington imposed Section 301 tariffs on China to counter what it described as unfair trade practices. Navarro argued that this network allowed China to “launder” its exports through countries with cheaper labour, weaker customs oversight, and preferential US trade access.

The report singled out India’s industrial corridor stretching from Pune to Gujarat and Chennai. Navarro alleged that Chinese pumps and compressors entering the US market as “Indian” products undermine manufacturing in American cities such as Cincinnati, Dayton, and Columbus. “A Chinese pump that leaves Pune as Indian is a pump not machined in Cincinnati,” he said.

The report estimates that the value of goods illegally transhipped each year could range between USD 40 billion and USD 303 billion, depending on how the activity is measured.

To counter this, the White House announced plans to deploy an AI-powered “detective border” system in collaboration with US Customs and Border Protection. This technology would analyse shipment data, routing histories, and other trade records to identify suspicious consignments.

Economists note that supply chain shifts away from China have benefited countries like Vietnam, but Washington now views many of these same nations as complicit in tariff evasion. Since returning to office, President Trump has expanded tariffs not only on Chinese imports but also on several US allies, intensifying trade tensions worldwide.

The report underscores a growing challenge for global trade: balancing legitimate supply-chain diversification with the risk of becoming conduits for tariff circumvention. For India and other nations named, the accusations could complicate diplomatic and economic relations with Washington, even as they seek to attract investment from companies moving production out of China.