Washington’s crackdown on transhipment risks puts India in the spotlight amid trade tensions

The White House has classified India among over 40 countries involved in what it calls the ‘Great Transhipment Scam,’ escalating trade tensions and signalling intensified efforts to police supply chains amid ongoing tariff negotiations.

Washington’s latest trade offensive has put India among more than 40 economies the White House says are being used to help Chinese exporters sidestep US tariffs. According to a new report from the Office of Trade and Manufacturing Policy, goods are being routed through third countries, re-labelled or given a false non-Chinese origin before entering the American market. The administration describes the practice as the “Great Transhipment Scam”. India is listed in the report’s highest-risk group alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan, which the White House says reflects large industrial bases where transhipment risks can be harder to separate from normal trade flows.

Peter Navarro, the senior trade adviser, singled out India during a briefing and warned that higher US tariffs could encourage other trading partners to follow similar routes. He said the administration’s message was that lower duties are not a licence to “launder somebody else’s exports”. The report pointed to examples such as Chinese electric motors used in recliners assembled in Vietnam and so-called screwdriver factories, where only minimal assembly takes place before export, without what US officials describe as “substantial transformation”. In Washington’s view, those cases show how companies can try to evade duties without meaningfully changing the product.

The report lands amid broader pressure from the Trump administration to reset trade terms with partners it views as benefiting unfairly from access to the US market. In February 2025, the White House set out its reciprocal trade agenda, arguing that trading relationships should be more balanced and that partners should face consequences when they do not play by the same rules. In July 2025, the administration said goods found by Customs and Border Protection to have been transhipped to avoid duties would face an additional 40% tariff, together with possible penalties. That policy backdrop gives the latest report sharper force, because it moves the issue from a general complaint about trade imbalance to a targeted enforcement effort.

For India, the timing is awkward. The transhipment warnings come as Washington and New Delhi continue difficult negotiations over a reciprocal tariff arrangement, while the United States also presses India over its purchases of Russian oil. The White House’s latest move suggests that trade talks are now being shaped not only by tariffs and market access, but also by a wider push to police supply chains and origin rules more aggressively across Asia and beyond.