A new report has named India as a major part of a “shadow transhipment network” that has allowed Chinese goods facing high US tariffs to enter the American market by rerouting through third countries facing lower tariffs. The report – entitled the “Great Transhipment Scam” and championed by key Trump adviser – estimates the value of potentially illegal transhipment at roughly $60 billion, costing the US government tens of billions in lost tariff revenue.
The report traces the origins of the problem to 2018, when the imposed Section 301 tariffs on select Chinese goods to remedy America’s growing trade deficit with China.
“After their imposition, Chinese exporters increasingly routed goods through third countries.
Products that previously moved directly from to the United States were shipped through jurisdictions where limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin,” the White House argues in its report.
Today, roughly 40 countries worldwide play a key role in enabling this “transhipment network” with the report sorting them into three different tiers based on the extent to which they enable the movement of Chinese-origin goods into the US at lower tariff rates. India – alongside major US trading partners such as Canada, Japan, the European Union, Israel, and Mexico – has been placed in Tier 1. One estimate cites US Commerce Department data to assert that “approximately $67 billion in U.S.-bound goods were transshipped from China through the top hubs—Mexico, India, and Vietnam—in 2025, producing an estimated $28 billion in lost tariff Revenue.”
The White House report estimates that increased economic pressure on US manufacturers from transshipped Chinese goods has led to serious economic consequences for the United States.
“Under a central case of $75 billion in annual illegal transhipment, the report estimates approximately 450,000 jobs displaced; $113 billion to $150 billion in reduced annual gross domestic product; and $19 billion to $26 billion in associated federal revenue losses. These figures are model-based estimates rather than observed job counts,” it reads.
Allowing US goods to enter the Chinese market at lower tariffs has enabled specific corridors within India to benefit economically at the expense of their American counterparts. For example, the report points to the Pune–Gujarat–Chennai corridor as one that has benefited from Chinese transhipment of electric pumps and compressors while hurting US manufacturers in cities like Cincinnati, Dayton and Columbus in the state of Ohio.
The report calls for firm action against countries that enable the rerouting of tariffed goods to evade US law, including immediate interdiction, penalty tariffs, sanctions, and potential loss of market access.
