US flags India among countries at risk of aiding Chinese tariff evasion

The United States has placed India among more than 40 countries it considers at risk of becoming conduits for Chinese goods seeking to evade US tariffs, Times of India reported, adding a fresh potential complication to trade negotiations between Washington and New Delhi.

A new report by the White House Office of Trade and Manufacturing Policy accused exporters in multiple countries of helping Chinese goods reach the US market through third countries by rerouting shipments, relabelling products or falsely declaring their country of origin.

The report dubbed the practice the “Great Transhipment Scam” and said Washington would intensify efforts to detect and penalise such shipments.

India was placed in Tier 1, alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan. The report described the group as “Diversified Scale Leaders” — large, diversified industrial economies where the risk of transshipment exists within otherwise legitimate trade flows.

Tier 2, or “Significant Economic Integration with China”, includes Brazil, Indonesia, Malaysia, Thailand, Turkey and Vietnam.

Bangladesh, Cambodia, the Philippines, Singapore, Sri Lanka and the UAE were placed in Tier 3, described as “Small, Opportunistic Targets”.

The classification does not allege that the countries or their governments are deliberately helping exporters evade US tariffs. Rather, it identifies jurisdictions where Washington sees varying degrees of transshipment risk.

US trade adviser Peter Navarro specifically named India and Vietnam while discussing the report, warning that countries facing higher US tariffs could have greater incentives to route Chinese goods through their territories.

“This is about the 40-plus countries that are enabling the transshipping, and as we impose higher tariffs on other countries, India, Vietnam, down the line, they're going to try this transhipment too,” Navarro said.

He urged countries seeking to lower their tariff burdens to address broader trade barriers instead of using transshipment to circumvent US measures.

“The way to pay less is not to cheat; it is to stop dumping, respect intellectual property, drop your barriers to American goods and move towards reciprocity,” Navarro said.

He also warned countries facilitating such trade that “preferential access to the American market is not a license to launder somebody else's exports.”

Transshipment itself is a normal feature of global trade, with goods often moving through several countries before reaching their final destination. Washington's concern is with shipments that are allegedly rerouted or undergo only limited processing in a third country to conceal their Chinese origin and avoid tariffs.

The report cited examples including Chinese electric motors being fitted into recliners in Vietnam. It also pointed to so-called “screwdriver factories”, where imported components undergo limited assembly before products are exported as originating in another country.

US officials said such processing may not amount to the “substantial transformation” required for a product to legitimately acquire a new country of origin.

Washington plans to step up its enforcement efforts through several measures, including an executive order aimed at strengthening the powers of US Customs and Border Protection and an AI-based monitoring system dubbed a “detective border”.

The system is intended to flag shipments considered more likely to involve transshipment before they reach US ports.

The administration is also seeking to incorporate anti-transshipment provisions into new trade agreements. Officials said such clauses could impose penalties on countries that allow disguised Chinese goods to enter the US through their territory.

The provisions could become relevant to future trade agreements, including a potential US-India deal, officials indicated.

Under the proposed enforcement framework, if a shipment is subsequently determined to have been transshipped, US customs authorities could potentially seek tariffs retrospectively on a company's shipments going back one year, rather than restricting action to the specific shipment identified.

The report comes as India and the US continue negotiations over a reciprocal tariff agreement, with the two sides already navigating disagreements over India's trade and energy ties with Russia.

While US officials said the report was “not about China” specifically, they identified Vietnam, Cambodia, Malaysia, Indonesia and the Philippines as key transshipment hubs and warned that other countries facing higher tariffs could have an incentive to follow the same route.

Officials declined to say how the findings could affect US President Donald Trump's expected meeting with Chinese President Xi Jinping, saying the report would inform the US Trade Representative's approach in negotiations.