US Flags India Among 40 Countries It Says Face Risk of Chinese Tariff Evasion
New Delhi : The United States has identified India and more than 40 other trading partners as countries that could be vulnerable to Chinese goods being rerouted through third countries to avoid higher US tariffs.
The warning was highlighted in a White House report titled “The Great Transshipment Scam”, prepared by Peter Navarro, a senior trade adviser to US President Donald Trump. The report focuses on what Washington describes as illegal transshipment, a practice in which goods made in China are sent through another country before entering the US market, potentially allowing importers to avoid or reduce tariffs imposed on Chinese products.
According to the report, the US believes China has increasingly relied on third-country supply chains since Washington first imposed major tariffs on Chinese imports in 2018. The report alleges that Chinese companies and trading networks have used countries with lower tariffs, cheaper labour, preferential trade access or weaker customs oversight as alternative routes into the US market.
Navarro described the practice as a large-scale system through which Chinese exports are allegedly made to appear as products originating from other countries.
The report names more than 40 countries and trading partners as having elevated risks of illegal transshipment. Apart from India, the list includes countries and regions such as Taiwan, Mexico, Japan, South Korea and Vietnam, along with Canada and the European Union.
However, the report does not suggest that every shipment passing through these countries is illegal. It notes that transshipment risks can exist within otherwise legitimate and extensive international trade flows.
How the alleged system works
According to Navarro, Chinese goods can be routed through another country and undergo relatively minor changes before being exported to the United States.
These changes could include limited processing, relabelling, repackaging, changes to invoices or alterations in shipping routes. The report argues that such practices can create the appearance that a product originated in the third country, even when much of its underlying Chinese content remains unchanged.
The US administration says this can allow companies to avoid tariffs that would otherwise apply to Chinese imports.
Navarro argued that Chinese manufacturers and trading companies could benefit from countries with lower production costs, free-trade zones, weaker customs enforcement or preferential access to the US market.
India specifically mentioned
India receives particular attention in the report, with the US pointing to the country’s manufacturing and industrial supply chains.
The report refers to the Pune-Gujarat-Chennai production belt, claiming that it plays a role in supplying pumps and compressors to industrial markets in the United States.
Navarro argued that Chinese-made industrial equipment routed through India could potentially compete with products manufactured by American companies.
The report’s reference to India has the potential to attract attention because New Delhi has increasingly positioned itself as an alternative manufacturing destination for global companies seeking to diversify their supply chains away from China.
At the same time, being included on the US list does not by itself mean that India has been accused of deliberately helping China evade tariffs. The report primarily identifies countries and trade routes that Washington considers vulnerable to such activity.
US estimates large scale of transshipment
The White House report estimates that the annual value of goods involved in illegal transshipment could range from approximately $40 billion to $303 billion, depending on the methodology and definition used.
The wide range reflects the difficulty of determining exactly how much international trade involves deliberate tariff evasion.
The issue has become increasingly important as the United States has expanded tariffs on Chinese goods and introduced broader trade measures affecting other countries.
Washington plans to use AI
To combat suspected tariff evasion, the Trump administration says it is working with US Customs and Border Protection on an artificial intelligence-powered system designed to identify suspicious shipments.
The proposed system would analyse information including shipping records, routing patterns and other trade data to determine whether goods entering the US may have been rerouted through third countries.
The administration hopes that technology will make it easier for customs authorities to identify unusual trade patterns and investigate shipments that may have been deliberately redirected.
Supply chains shifting beyond China
The US concerns come against the backdrop of a major transformation in global manufacturing. Since the US-China trade tensions intensified in 2018, many companies have attempted to diversify their production and sourcing networks.
Countries such as Vietnam and other Asian economies have benefited from companies looking to reduce their dependence on China. India has also been seeking to attract more global manufacturing investment and expand its role in international supply chains.
The latest US report highlights the challenge facing countries that have become part of these increasingly complex networks. While legitimate supply-chain diversification is legal, Washington says companies that deliberately disguise the origin of Chinese goods to avoid tariffs could face enforcement action.
The report therefore signals that the US intends to take a closer look at the movement of Chinese goods through third countries. For India and other major trading partners, the development could mean greater scrutiny of supply chains, customs documentation and the origin of products being exported to the American market.
News source: Information for this article was gathered from a variety of reliable news outlets.
