The United States has accused more than 40 countries, including India, of participating in what it describes as a “shadow transshipment network” that enables Chinese goods to bypass high American tariffs. The claims appear in a report titled “The Great Transshipment Scam,” released by senior trade adviser Peter Navarro.
According to the report, the practice became more widespread after 2018, when the US imposed Section 301 tariffs on Chinese products over alleged unfair trade practices. China is said to route goods through third countries for limited processing, relabelling, repackaging, reinvoicing or simple routing changes. These steps create the appearance of a different country of origin while the underlying Chinese content remains largely unchanged.
The countries identified as part of this network include major US trading partners such as Mexico, Canada, the European Union, India, Japan and South Korea. The report estimates the annual value of goods involved in such transshipment at between USD 40 billion and USD 303 billion, depending on the calculation method used.
One specific example cited involves India’s Pune-Gujarat-Chennai industrial corridor. The report states that this region absorbs Chinese pumps and compressors that are then exported under an Indian origin, affecting manufacturing supply chains in US cities such as Cincinnati, Dayton and Columbus.
To counter the practice, the US plans to deploy an artificial intelligence system known as “Detective Border.” The tool is designed to analyse shipment data, routing histories, product classifications, ownership links and production capacity. Its aim is to separate legitimate nearshoring and foreign investment from illegal pass-through trade, identify high-risk consignments, and support interdiction, duty recovery, penalties and exclusion measures.
Navarro described the network as allowing China to “launder” its exports through third countries for years. The report frames the issue as one that has cost the US Treasury tens of billions of dollars in lost tariff revenue while impacting American manufacturing employment.