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Informist, Friday, Aug. 14, 2026

 

NEW DELHI – In a move that could result in fresh complications in the trade negotiations between India and the US, Washington has included the country in a list of 40 accused of allowing China to evade US tariffs through a "shadow network". "China's biggest enablers range from Mexico and Canada on US land borders to the European Union, India, Japan, and South Korea," the White House said in a report called 'The Great Transhipment Scam'.

 

In the report, the White House Office of Trade and Manufacturing Policy has accused exporters in multiple countries of helping Chinese goods enter the US market through third countries, including by re-routing shipments, re-labelling products, or falsely declaring the country of origin. "When a Chinese product facing a high US tariff can be routed through a country with a lower tariff rate, the difference becomes a profit pool," it said. "That spread is what turns transshipment from a marginal customs abuse into a global business model." 

 

As per the report, the value of Chinese goods rerouted through third countries each year is somewhere between $40 billion and $303 billion, depending on the methodology and definition used. It singles out the Pune-Gujarat-Chennai belt as one of the locations enabling China to evade tariffs. "India's Pune–Gujarat–Chennai production belt absorbs pumps and compressors in HS 8413-8414, affecting industrial supply chains in Cincinnati, Dayton..." according to the report. 

 

The report comes at a time when the US has already slapped 10% tariff on India for failing to entirely prohibit the import of goods produced using forced labour and is in the process of enacting a bill that would see tariffs of up to 100% imposed on India and a few others for importing Russian crude oil. Additionally, India risks more tariffs due to an ongoing investigation by the US Trade Representative related to excess capacity.

 

Negotiations on the trade pact have seen many ebbs and flows, with the two countries having major differences over opening up India's sensitive agricultural sector to genetically modified US products. The two countries had on Feb. 7 issued a joint statement agreeing on a framework for an interim agreement for mutually beneficial trade but are yet to finalise the first phase of the trade agreement.

 

The US plans to set up an artificial intelligence tool called "Detective Border" to help identify goods that reach the US after passing through third countries. "Under (US President Donald) Trump's leadership, CBP's (Customs and Border Protection's) emerging AI architecture is fusing anomaly detection, link analysis, capacity validation, and mirrored-flow verification into a single predictive platform--the foundation of what can now be called America's Detective Border," according to the report.

 

India's exports to the US in Apr-Jul totalled $34.49 billion, slightly higher than a year ago. Imports from the US, on the other hand, rose to $22.12 billion from $18.07 billion in the corresponding period a year ago.  End

 

US$1 = INR 95.42

 

Reported by Pratiksha

Edited by Rajeev Pai

 

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