India faces renewed US scrutiny for reportedly enabling China to bypass American tariffs by redirecting exports via Indian routes. The claims appear in a new White House document titled The Great Transhipment Scam.
The report specifically highlights the Pune-Gujarat-Chennai corridor as a zone facilitating Chinese tariff avoidance, which harms US supply chains.
This occurs as the US applies a 10 percent tariff on India over insufficient action against forced-labor imports and considers laws that could raise duties to 100 percent for Russian oil purchases.
A separate US Trade Representative probe into excess capacity may add further tariffs.
The US imposed duties of 7.5 to 100 percent on Chinese goods in 2018 under trade laws targeting unfair practices. In July 2026 an extra 12.5 percent was added for forced-labor issues.
Following these measures, Chinese exporters increasingly used third countries for shipments, the report states. Goods once sent directly from China to the US now pass through places where minor assembly, finishing, repackaging or label changes create the impression of different origins.
More than 40 nations show elevated transshipment risks, with India listed among leading enablers.
The document groups these countries into three tiers by violation scale. Tier one covers partners with large volumes of China-linked goods and strong US export links, including Canada, the European Union, India, Israel, Japan, Mexico, South Korea and Taiwan.
The report notes that India’s Pune-Gujarat-Chennai belt processes pumps and compressors, impacting US industrial supply chains.
Tariff differences drive the scheme, creating revenue losses for the US and gains for exporters. These savings fund equipment and facilities across regions including India.
Such operations focus on evasion rather than genuine production.
Estimates indicate 67 billion dollars in US-bound goods moved through Mexico, India and Vietnam in 2025, resulting in 28 billion dollars in lost tariff revenue.
