Trump Administration Targets Global Trade Routes as India Gets Caught in China Tariff Dispute

The Trump administration has expanded its focus on Chinese tariff evasion beyond China’s borders, identifying India and more than 40 other countries as part of what the White House describes as a global “shadow transhipment network.”

The allegation is part of a major US effort to strengthen enforcement of tariffs and prevent companies from using third countries to reduce their tariff obligations.

According to the White House report The Great Transshipment Scam, the practice became increasingly important after the United States imposed Section 301 tariffs on Chinese products in 2018.

The report argues that Chinese exporters discovered that the economic impact of tariffs could be reduced by moving goods through countries with lower US tariff rates. Some products could receive limited processing before being exported to America.

The White House says this may include light assembly, testing, finishing, packaging, relabelling, re-invoicing or other documentation changes. The report distinguishes these activities from substantial manufacturing transformation that would genuinely change a product’s origin.

India’s inclusion in Tier 1 makes the country one of the most significant locations mentioned in the report. Other countries in the broader group include Mexico, Canada, Japan, South Korea and several European economies.

The White House says the network is not a single organisation. Instead, it describes a distributed system involving manufacturers, logistics companies, ports, warehouses, free-trade zones and re-export platforms.

That distinction is important. The US report is describing a trade pattern rather than accusing one central organisation of controlling all shipments.

The economic logic behind transhipment is straightforward. If Chinese goods face a high US tariff while similar goods from another country face a lower tariff, there is a financial incentive to move some production or trade activity to the second country.

Washington believes this incentive has encouraged a major restructuring of global supply chains.

The White House estimates that more than 40 countries now present elevated transhipment risks. It says the combined share of US imports from these countries has risen as China’s direct share of the American import market has declined.

One estimate cited by the report puts the value of US-bound goods transhipped through major hubs including India at approximately $67 billion in 2025. The report estimates around $28 billion in potential lost tariff revenue from those flows.

Washington’s concern is not limited to government revenue. The Trump administration argues that tariff evasion can weaken American manufacturing by allowing imported products to avoid the costs that US trade policy intended to impose.

The White House report estimates that under a central scenario involving $75 billion in annual illegal transhipment, the US economy could experience substantial job and GDP effects. It estimates 450,000 displaced jobs and $113 billion to $150 billion in reduced annual GDP, while acknowledging that these are model-based estimates rather than observed employment losses.

The US response is expected to involve more sophisticated customs monitoring. The proposed “Detective Border” initiative would use artificial intelligence to analyse trade flows and detect inconsistencies.

That could include comparing shipping routes with declared country of origin, examining whether an exporter has enough production capacity to manufacture the quantity it claims, and tracking relationships between companies.

India’s inclusion could therefore have practical implications for exporters. Companies may need to maintain more detailed records regarding components, suppliers, manufacturing processes and product origins.

At the diplomatic level, the development could add another complication to India-US economic relations. India is seeking to expand exports to America, while the United States wants greater assurance that its tariff system cannot be bypassed through third countries.

The controversy also demonstrates how trade wars can reshape international commerce. Tariffs imposed on one country can influence production decisions in several other countries, creating new supply chains and new enforcement challenges.

For India, the immediate priority will likely be ensuring that legitimate domestic manufacturing is clearly distinguishable from simple transhipment. The stronger the evidence of genuine value addition and transparent origin, the easier it will be for Indian exporters to defend their access to the American market.