White House report intensifies scrutiny on India’s role in transshipping Chinese goods

The US accuses over 40 countries, including India, of aiding Chinese exporters in sidestepping tariffs through transshipment, raising concerns about global supply chains and India’s manufacturing reliance on Chinese inputs.

The White House’s latest attack on trade leakage has put India back in the middle of Washington’s tariff politics. In a report it has labelled “The Great Transhipment Scam”, the administration accuses more than 40 countries of helping Chinese exporters sidestep U.S. duties, with India named among the main conduits. The claims add to an already strained trade relationship and suggest that transhipment, not just direct exports from China, has become a central concern for U.S. enforcement.

At the core of the allegation is a familiar pattern. According to the White House account, Chinese goods that once travelled directly to the United States are increasingly being routed through third countries, where light processing, relabelling or changes in documentation can make them appear to originate elsewhere. The report says this practice has spread since the first wave of U.S. tariffs on China in 2018 and has undermined the intended effect of those measures. The Brookings Institution has separately argued that such rerouting can blunt the impact of tariffs by shifting the route of trade rather than reducing it.

India is one of the countries named as a top hub in the White House analysis, alongside Mexico and Vietnam. The report says the Office of Trade and Economic Analysis estimates that about $67 billion in U.S.-bound goods were transhipped from China through those hubs in 2025, costing the U.S. an estimated $28 billion in lost tariff revenue. It also points to industrial supply chains in India, including the Pune-Gujarat-Chennai belt, as part of the problem the administration wants to address.

For Washington, the broader implication is uncomfortable. Despite steep tariffs on China, U.S. imports from China have fallen while total imports from all countries have risen, suggesting that sourcing has shifted rather than shrunk. That conclusion echoes analysis cited by the Global Trade Research Initiative, which says Trump’s tariff strategy changed where goods came from without reducing America’s dependence on foreign supply.

For India, the risk is that the current scrutiny could widen into penalties. The U.S. has already imposed other trade and policy pressures on New Delhi, including tariffs linked to Russian oil purchases and a separate forced-labour-related duty. Reuters has also reported a U.S. investigation into Waaree Energies over allegations that Chinese-made solar products were mislabelled as Indian, underlining the practical exposure of Indian firms to American customs enforcement. Any additional action tied to transhipment would matter because Indian manufacturing still relies heavily on Chinese inputs, from electronic components to chemicals and machinery. If access to those inputs is curtailed, the cost of domestic production could rise and India’s export competitiveness could weaken.