A new White House report has placed India among more than 40 countries it identifies as being at elevated risk of facilitating the transshipment of China-linked goods into the United States, as Washington intensifies its crackdown on what it describes as ‘tariff evasion’.
The report, titled ‘The Great Transshipment Scam’, issued by the White House Office of Trade and Manufacturing Policy, alleges that exporters can exploit differences in US tariff rates by routing goods through third countries before sending them to the American market.
According to the report, such practices can involve relabelling, repackaging, re-invoicing, minor processing or other changes that may create the appearance of a different country of origin.
Importantly, the report does not say that all trade from the countries it identifies is illegal. It acknowledges that many of the countries listed are major trading partners of the US with substantial and legitimate industrial activity.
India is placed in Tier 1, described as a group of “Diversified Scale Leaders” where potential transshipment risks are embedded within large volumes of legitimate trade. The group also includes Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan.
Why India figures in the report
The White House report alleges that China-linked exporters can use third countries for limited assembly, finishing, testing, packaging, relabelling or changes in documentation before goods are exported to the US. It says the key question for customs authorities is whether such activity amounts to genuine substantial transformation or merely changes the appearance of a product’s origin.
The report specifically refers to India when discussing so-called “screwdriver factories” facilities that, according to the document, may carry out limited assembly or processing primarily to shift the declared origin of goods and reduce tariff exposure. It lists India alongside Southeast Asia and Eastern Europe in this context. The report, however, presents these as alleged mechanisms used by China-linked exporters and does not establish that Indian manufacturers generally engage in such practices.
India also gets a specific mention in the report’s examination of manufacturing corridors. The document identifies the Pune-Gujarat-Chennai production belt and links it to pumps and compressors under HS codes 8413 and 8414. It then compares that trade flow with manufacturing activity in Cincinnati, Dayton and Columbus in the United States.
The report says these foreign-US comparisons are intended to illustrate potential pressure on American manufacturing when China-linked goods are rerouted through third countries. It describes the examples as illustrative rather than exhaustive.
What this could mean for Indian exporters
The report’s broader message is that Washington intends to place greater emphasis on proving where a product was actually made and how much transformation took place in a third country.
The White House says its Agreements on Reciprocal Trade contain provisions allowing rules of origin to be established to prevent trade benefits from accruing substantially to third countries through illegal transshipment. It also points to Executive Order 14411, which it says strengthens customs enforcement, importer accountability, ownership disclosure and trade transparency.
What it means for India?
For Indian companies exporting to the US, this could translate into greater scrutiny of supply chains, particularly where products contain significant Chinese components or pass through complex ownership and logistics arrangements.
The report also outlines an AI-enabled system it calls “Detective Border”. According to the document, the system is intended to combine shipment information, routing histories, product classifications, ownership links, production-capacity indicators and anomaly detection to help US Customs and Border Protection identify potentially high-risk shipments.
The scale of the US concern
The White House report estimates that potential illegal transshipment into the US could range from about $40 billion to $303 billion annually, depending on the methodology used.
It stresses that these estimates are not additive and measure different forms of potential exposure. A central estimate used in the report puts annual illegal transshipment at about $75 billion.
The report argues that such activity could result in billions of dollars in lost tariff revenue. Under its central $75-billion estimate, it calculates potential annual tariff losses of between roughly $19 billion and $34 billion, depending on the assumed tariff differential.
As Washington looks more closely at the origin of goods entering its market, Indian exporters with transparent supply chains and demonstrable domestic value addition may have less to worry about, while businesses relying heavily on imported Chinese inputs and minimal local processing could face tougher questions about the true origin of their products.
The report frames the issue as a distinction between legitimate manufacturing and simple pass-through trade. For India, that distinction could become increasingly important as the Trump administration seeks to prevent tariff differentials from being exploited to bring China-linked products into the US market under a different country-of-origin label.
