The United States has named India as part of an international "shadow transshipment network" that China is allegedly using to sidestep steep American tariffs. A White House report titled "The Great Transshipment Scam" claims that Beijing has been routing goods through roughly 40 countries — including India, Mexico and Vietnam — to reach US markets while avoiding the heavy duties imposed on Chinese exports.
According to the report, this pattern of tax evasion dates back to 2018, when the Donald Trump administration imposed steep tariffs on Chinese goods under "Section 301." To escape these duties, Chinese exporters allegedly stopped shipping directly to the US and instead began routing goods through third countries. There, minor alterations, assembly work, repackaging or falsified paperwork were reportedly used to change the declared country of origin, making it appear on paper that the goods originated elsewhere rather than China.
The White House report identifies around 40 countries worldwide whose trade routes China is said to be exploiting. India has been placed in the "Tier-1" category alongside major US trading partners such as Canada, Japan, Israel and the European Union. Figures cited in the report suggest that in 2025 alone, Chinese goods worth close to $67 billion reached the US via Mexico, India and Vietnam, resulting in an estimated $28 billion loss in tariff revenue for the American government.
The report alleges that India's Pune-Gujarat-Chennai corridor has benefited significantly from the transshipment of Chinese electric pumps and compressors, at a heavy cost to American companies and domestic manufacturers. This alleged illegal trade is said to have had a serious impact on the US economy, with an estimated 4.5 lakh job losses and an annual GDP decline of $113–150 billion. The US government is also said to have lost between $19 billion and $26 billion in federal revenue as a result. In response, the White House has warned that countries found assisting China in this manner will face immediate restrictions, penalties and strict action.