US Report Accuses India and Over 40 Nations of Enabling Chinese Tariff Evasion

A report released by the White House Office of Trade and Manufacturing Policy has placed India among more than 40 nations accused of helping Chinese exporters circumvent United States tariffs through an alleged global transshipment network.

What Happened

On August 13, 2026, the White House published a 25-page document titled The Great Transshipment Scam: Rise, Scope, and Costs. Prepared under senior trade adviser Peter Navarro, the document claims that Chinese goods are being rerouted, relabelled, repackaged, re-invoiced, or subjected to minor processing in third countries before entering the US under different countries of origin.

The report groups more than 40 nations into three categories. India is placed in Tier 1, titled “Diversified Scale Leaders,” alongside Canada, the European Union, Israel, Japan, Mexico, South Korea, and Taiwan. Tier 2 (“Significant Economic Integration with China”) includes Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam, while Tier 3 (“Small, Opportunistic Targets”) includes economies such as Bangladesh, Cambodia, the Philippines, Singapore, Sri Lanka, and the UAE.

The document refers to a US Commerce Department estimate stating that $67 billion worth of goods were transshipped through India, Mexico, and Vietnam in 2025, leading to $28 billion in lost tariff revenue. However, the report does not provide India’s specific share of that figure, nor does it identify any Indian exporter or document specific fraudulent shipments.

Key Highlights

• Network Allegations: The US administration alleges that Section 301 tariffs introduced against China in 2018 prompted a global “Shadow Transshipment Network.”
• Varying Estimates: The report references five external estimates of transshipment exposure ranging from $40 billion (Goldman Sachs), $60 billion (White House Council of Economic Advisers), $75 billion (Exiger), and $109 billion (US Commerce Department) to $303 billion (Altana).
• Targeted Sectors: The report points to India’s Pune-Gujarat-Chennai manufacturing belt for products under HS codes 8413 and 8414 (liquid pumps, air pumps, and gas compressors).
• Trade Data Context: According to the Global Trade Research Initiative (GTRI), India exported $1.61 billion in liquid pumps globally ($414.5 million to the US) in FY2026 while importing $326.4 million from China. India also exported $1.48 billion in air pumps and compressors ($335.4 million to the US) while importing $1.63 billion from China.
• Broadened Definitions: GTRI noted that the US report broadens the concept of transshipment to encompass component integration, testing, assembly, and finishing.

Why This Matters

Trade think tank GTRI, founded by Ajay Srivastava, observed that US imports from China dropped from $525.8 billion in 2017 to $327.5 billion in 2025, while total US imports expanded from $2.41 trillion to $3.50 trillion over the same timeline. This indicates that US demand shifted toward imports from alternative manufacturing nations rather than domestic production.

GTRI noted that China has adapted by acting as a primary supplier of intermediate inputs and components to countries like India, Mexico, and Vietnam. When intermediate goods undergo substantial transformation in another country, they represent legitimate manufacturing exports rather than fraudulent transshipment.

What to Watch Next

According to GTRI, India should ask the United States to share detailed, shipment-level and product-level evidence supporting its allegations, including India’s specific breakdown of the $67 billion estimate.

GTRI also recommended that Indian authorities independently review firm-level imports from China versus exports to the United States within the pump and compressor categories to verify domestic value addition and protect compliant exporters against unsubstantiated claims.

Frequently Asked Questions

Which countries were placed in Tier 1 alongside India?

India was grouped in Tier 1 (“Diversified Scale Leaders”) alongside Canada, the European Union, Israel, Japan, Mexico, South Korea, and Taiwan.

Did the US report identify specific fraudulent shipments from India?

No. The report did not specify India’s exact share of the alleged $67 billion transshipment figure, name specific Indian firms, or detail any specific fraudulent shipments.

What specific Indian industries were highlighted in the report?

The report singled out the Pune-Gujarat-Chennai manufacturing corridor for liquid pumps, air pumps, and gas compressors under HS codes 8413 and 8414.

Source: timesofindia.indiatimes.com