White House report flags India in China-linked transshipment network

The White House report places India in Tier 1 of China's alleged transshipment network and flags the Pune-Gujarat-Chennai production belt as a potential corridor

As Washington steps up efforts to prevent Chinese goods from circumventing US tariffs through third countries, the White House has identified India among more than 40 countries and trading jurisdictions that the US administration considers exposed to Chinese-linked transshipment risks. “The countries that comprise China’s shadow transshipment network include many of America’s largest trading partners. China’s biggest enablers range from Mexico and Canada on the US land borders to the European Union (EU), India, Japan, and South Korea,” the White House Office of Trade and Manufacturing Policy said in a report titled “The Great Transshipment Scam”. The report particularly identified India's Pune-Gujarat-Chennai production belt as a potential corridor for imports of China-linked pumps and compressors into the US. Activity in this corridor affects US industrial supply chains based in Cincinnati, Dayton, and Columbus, the report claimed.

 

 

A review of India’s trade data with the US showed that India’s exports of pumps and compressors to the US were around $750 million in 2025-26 (FY26), accounting for less than 1 per cent of its total shipments to the country. Meanwhile, India’s imports of these items from China were nearly $2 billion in FY26.

 

Quoting estimates by the Office of Trade and Economic Analysis, the report said the US received around $67 billion worth of goods in 2025 that it estimated had been transshipped from China through hubs including Mexico, India and Vietnam. It estimated that this resulted in a $28 billion loss in tariff revenue. The report did not provide an estimate for the value of goods allegedly transshipped through India alone.

 

The Indian government is currently reviewing the findings and the methodology adopted in the White House report. “We would like to study the findings and the methodology adopted in detail,” Ministry of External Affairs Spokesperson Randhir Jaiswal said. “We have robust laws and procedures governing customs, rules of origin, and exports of products and any instances of violation that may occur are dealt with in accordance with the law.”

 

The report defines illegal transshipment as the routing of goods through a third country where they may undergo minor processing, relabelling, repackaging, reinvoicing or changes in paperwork that create the appearance of a new country of origin without substantial transformation. According to the report, China has responded to tariffs imposed on it by Washington since 2018 by reducing direct exports to the US while encouraging the development of a global transshipment network.

 

The White House report has grouped the more than 40 identified economies into three tiers and placed India in Tier 1 of “China’s Shadow Transshipment Network”, alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan.

 

The report described the Tier 1 economies as “Diversified Scale Leaders” that account for large absolute volumes of China-linked goods while having diversified industrial bases and major US-bound export platforms. It stressed that in these jurisdictions, transshipment risk is embedded within broad legitimate trade flows.

 

Trade experts in India remain sceptical of the finding in the White House report. According to New Delhi-based think tank Global Trade Research Initiative (GTRI), the report stretches the technical meaning of transshipment. “It thereby mixes origin fraud with legitimate manufacturing. This risks presenting legitimate processing and global supply-chain production as transshipment before any violation is proved,” GTRI Founder Ajay Srivastava said.

 

The report has proposed an artificial intelligence-enabled “Detective Border” system to identify anomalous routing patterns, assess production capacity and direct customs enforcement towards high-risk shipments.

 

“The proposed AI-enabled ‘Detective Border’ could lead to more inspections, shipment delays, retrospective duties and penalties,” Srivastava flagged.

 

The report comes at a sensitive time for India-US trade: just a week after the US Senate also passed a bill that could expose India to punitive tariffs of up to 100 per cent over its purchases of Russian oil. Additionally, the Office of the US Trade Representative has an open investigation against India under Section 301 of the US Trade Act, alleging excess capacity.

 

Ram Singh, head and professor at the Indian Institute of Foreign Trade, said the US had been adding “layer after layer” of uncertainty to the global trade order. “All these reports and announcements by the US seem like attempts to gain a lever in trade deal negotiations with India as well as other economies,” Singh added.

 

Indian exporters, however, fear that the report may lead to non-tariff barriers at a time when tariff barriers already exist. Indian goods currently face an additional 10 per cent tariff in the US under Section 301 of the US Trade Act of 1974, with Washington having laid out multiple avenues for a further increase in tariffs.

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(With inputs from Archis Mohan)