The trade relationship between India and the United States has come under fresh scrutiny after a White House report alleged that India is among the countries being used as a transit point for Chinese-origin goods entering the US market while avoiding higher tariffs. The report, titled The Great Transhipment Scam, reportedly examines how Chinese products subject to US tariffs may be routed through third countries before reaching American buyers. It names India and a number of other significant trading economies as members of a larger global network that, according to Washington, can make it more difficult to ascertain the actual source of imported goods. The accusations coincide with a delicate period in India-US trade relations, as both nations are still negotiating tariffs, market access, and more extensive economic cooperation.

What is transshipment and why is the US concerned?

Transshipment itself is not illegal. In global trade, companies routinely move goods through different countries before they reach their final destination. The issue arises when the route is allegedly used to disguise the actual country of origin of a product. The research states that Chinese items subject to hefty US duties may be shipped to another nation for minimal processing, repackaging, labeling, or documentation adjustments. The goods can then potentially be exported to the United States under a different country-of-origin designation. Washington argues that such practices can undermine the purpose of tariffs imposed on Chinese products. The US administration has already taken steps aimed at limiting tariff evasion. In order to lower the danger of transshipment and duty avoidance, a White House order from 2025 explicitly stated that tariffs on Chinese imports should also apply to certain items from Hong Kong and Macau.

India placed among key countries mentioned in report

The White House report reportedly divides around 40 countries into different categories based on their alleged role in facilitating the movement of Chinese-origin goods into the American market. India has been placed in the first tier along with several major trading partners, including Mexico, Canada, Japan, the European Union and Israel. Being included in such a category does not by itself establish that the Indian government or Indian businesses have knowingly participated in illegal tariff evasion. The report's allegations concern trade routes and practices that Washington believes may facilitate the movement of Chinese-origin products. This distinction is important because India has a large and legitimate manufacturing and export sector, while Chinese components and raw materials are also part of several international supply chains.

Billions of dollars in goods under scrutiny

One of the report's key estimates relates to the volume of goods allegedly moving through major transshipment hubs. The report cites US Commerce Department data and estimates that approximately $67 billion worth of US-bound goods were transshipped from China through major hubs, including India, Mexico and Vietnam, during 2025. It further estimates that such activity could have resulted in around $28 billion in lost tariff revenue for the United States. These numbers are estimates contained in the report and should not be interpreted as a confirmed measurement of illegal trade conducted through India. The distinction between legitimate transshipment, normal international supply chains and deliberate customs fraud is particularly important when interpreting the figures.

Why India matters to global supply chains

India's inclusion in the discussion reflects the country's growing importance in global manufacturing and logistics. Over the past few years, companies have increasingly looked at India as an alternative manufacturing destination as businesses attempt to diversify their supply chains beyond China. Indian industrial clusters across Maharashtra, Gujarat, Tamil Nadu and other states have strong connections with international manufacturing networks. Ports, logistics centres and inland container depots connect these production centres with markets around the world. That makes India an important part of legitimate global trade but it also means Indian trade routes can come under greater scrutiny when the US investigates the origin of products entering its market. For Indian exporters, the issue could therefore extend beyond the current political controversy.

Pune-Gujarat-Chennai corridor mentioned

The report reportedly highlights industrial corridors connecting parts of Maharashtra, Gujarat and Tamil Nadu. It points to the movement of products such as electric pumps and compressors and argues that Chinese-origin goods moving through these supply-chain routes could create competitive pressure on American manufacturers. The report links such activity to manufacturing centres in the United States, including cities in Ohio. However, identifying a trade corridor as vulnerable to transshipment does not mean every company operating along that corridor is involved in wrongdoing. Supply chains are often complex, involving manufacturers, component suppliers, freight forwarders, ports, distributors and exporters across several countries. Determining whether a particular shipment violates US customs law requires examination of the individual transaction, documentation and actual manufacturing process.

Estimated impact on US jobs and economy

The report also presents economic models to estimate the potential consequences of large-scale tariff evasion. Under one scenario involving roughly $75 billion in annual illegal transshipment, it estimates that hundreds of thousands of US jobs could be displaced and that the American economy could lose more than $100 billion in annual GDP. The report also estimates substantial losses in federal revenue. However, these are model-based projections, rather than a verified count of jobs directly lost because of specific shipments. That makes the figures useful for understanding the argument being made by the Trump administration, but they should not be treated as independently confirmed economic losses.

Could India face more US trade pressure?

The latest allegations could add another layer of complexity to ongoing India-US trade negotiations. The Trump administration has repeatedly focused on tariffs, trade deficits and what it considers unfair trade practices. In 2025, the White House also described the US trade deficit and related economic concerns as a national emergency while introducing sweeping tariff measures. More recently, Washington has continued examining trade practices across a wide range of economies. In July 2026, the White House listed India among 60 economies involved in Section 301 investigations concerning the enforcement of prohibitions on imports produced with forced labour. That investigation is separate from the transshipment allegations, but it illustrates the broader level of scrutiny currently facing international suppliers.

What it means for Indian exporters

For Indian businesses exporting to the US, the latest development could increase the importance of maintaining detailed supply-chain records.

Exporters may face greater scrutiny over:

  • Country-of-origin declarations
  • Manufacturing records
  • Supplier documentation
  • Customs paperwork
  • Product transformation and processing
  • Import-export invoices
  • Shipping routes
  • Component sourcing

Businesses dealing with Chinese components or partially assembled products may need to pay particular attention to documentation showing where substantial manufacturing or transformation actually took place.

India-China-US trade triangle under the spotlight

The bigger story is not simply about India. It reflects a changing global trading environment in which the United States is attempting to prevent Chinese goods from reaching American consumers through alternative routes. China remains a major manufacturing power, India is expanding its role in global supply chains, and the United States remains one of India's most important export markets. That combination makes the India-China-US trade triangle increasingly significant. If Washington continues tightening enforcement against tariff evasion, countries that serve as major manufacturing and logistics hubs could face greater pressure to demonstrate that products entering the US genuinely meet their declared country-of-origin requirements.

What happens next?

The immediate question is whether the allegations lead to additional customs investigations, penalties or trade measures involving individual companies or countries. For India, the challenge will be to protect its legitimate export interests while ensuring that its customs and trade systems are strong enough to prevent deliberate misuse of Indian routes. For the United States, the challenge will be distinguishing genuine tariff evasion from ordinary international supply-chain activity. The latest report therefore represents more than another dispute over tariffs. It signals that trade-route transparency, country-of-origin rules and supply-chain verification are becoming increasingly important in the next phase of global commerce.As India seeks to expand its role as a major manufacturing and export hub, how it responds to allegations surrounding transshipment could have implications not only for its relationship with Washington but also for its ambitions to become a larger alternative in global supply chains.