India in U.S. crosshairs again — White House report cites countries ‘enabling’ China’s tariff evasions

India is as soon as once more within the U.S.’ crosshairs, this time for allegedly permitting China to evade U.S. tariffs by routing its exports via the nation. The newest allegations are a part of a brand new White Home report referred to as ‘The Great Transhipment Scam’.

Specifically, the U.S. has named the Pune-Gujarat-Chennai belt as one of many areas “enabling” China to evade tariffs to the detriment of provide chains within the U.S. 

This comes at a time when the U.S. has already imposed a ten% tariff on India for not doing sufficient to cease the import of products made utilizing compelled labour, and is within the strategy of enacting laws that will see tariffs of as much as 100% imposed on India for its import of Russian oil. 

An ongoing investigation by the U.S. Commerce Consultant (USTR) associated to extra capability may see additional tariffs on prime of all this. 

‘Enabling’ China to evade tariffs

The U.S. had in 2018 levied tariffs starting from 7.5% to 100% on items from China underneath Part 301 of the Commerce Act of 1974 for unfair commerce and tech practices. On July 24, 2026, it added an extra 12.5% tariff for forced-labour compliance gaps. 

“After their imposition, Chinese language exporters more and more routed items via third nations,” the White Home report famous. “Merchandise that beforehand moved instantly from China to the USA had been shipped via jurisdictions the place restricted meeting, ending, repackaging, relabeling, or documentation adjustments may create the looks of a distinct nationwide origin.” 

The report has recognized greater than 40 nations related to “elevated unlawful transshipment danger”, with India among the many prime “enablers” of China’s evasion of tariffs. 

India amongst prime enablers

“The nations that comprise China’s Shadow Transshipment Community embrace a lot of America’s largest buying and selling companions,” the report stated. “China’s largest enablers vary from Mexico and Canada on U.S. land borders to the European Union, India, Japan, and South Korea.”

The report classifies the 40-odd nations into three tiers based mostly on how large a transgressor the U.S. feels they’re.

The highest tier includes “nations and buying and selling blocs that account for giant absolute volumes of China-linked items whereas sustaining diversified industrial bases and main U.S.-bound export platforms”. 

The report added that in these economies, unlawful transshipment danger is embedded inside broad reliable commerce flows. This Tier 1 consists of Canada, the European Union, India, Israel, Japan, Mexico, South Korea, and Taiwan.

“India’s Pune-Gujarat-Chennai manufacturing belt absorbs pumps and compressors… affecting industrial provide chains in Cincinnati, Dayton, and Columbus,” the report added.

How the rip-off supposedly works

The report goes on to elucidate that tariff arbitrage lies on the coronary heart of this transshipment association. When a Chinese language product that faces a excessive U.S. tariff is routed via a rustic with a decrease tariff charge, that distinction concurrently turns into a lack of income for the U.S. authorities and a revenue for the exporter. 

“Such tariff arbitrage creates the monetary engine behind the Nice Transshipment Rip-off,” the report added. “The financial savings are greater than ample to finance the capital tools, logistics infrastructure, mild meeting crops, repackaging operations, and ‘screwdriver factories’ wanted to help the rip-off throughout Southeast Asia, Mexico, India, and Jap Europe.” 

It added that such meeting factories are designed for tariff evasion, and tariff avoidance slightly than true manufacturing.

“The Workplace of Commerce and Financial Evaluation (OTEA) estimates that roughly $67 billion in U.S.-bound items had been transshipped from China via the highest hubs — Mexico, India, and Vietnam — in 2025, producing an estimated $28 billion in misplaced tariff income,” the report stated.