U.S. Names India Top Hub in China's Tariff Evasion Scheme
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- The White House report 'The Great Transshipment Scam' classified India in Tier 1 alongside Canada, the EU, Japan, Mexico, South Korea, Israel, and Taiwan — countries with 'large absolute volumes of China-linked goods' and 'major U.S.-bound export platforms,' with risk 'embedded within broad legitimate trade flows.'
- The report specifically singled out India's Pune-Gujarat-Chennai production belt as absorbing pumps and compressors previously shipped direct from China to the U.S., 'affecting industrial supply chains in Cincinnati, Dayton, and Columbus.'
- The Office of Trade and Economic Analysis (OTEA) estimated $67 billion in U.S.-bound goods were transshipped from China through the top hubs of Mexico, India, and Vietnam in 2025, producing an estimated $28 billion in lost tariff revenue.
- India already faces a 10% U.S. tariff for forced-labor compliance gaps, with legislation pending for tariffs of up to 100% over its Russian oil imports, plus a separate USTR investigation into excess capacity that could stack further duties on top.
- The report describes the mechanism as 'tariff arbitrage' — Chinese goods facing high U.S. duties are routed through lower-tariff third countries, with the savings financing 'screwdriver factories,' light assembly plants, and repackaging operations across India, Southeast Asia, Mexico, and Eastern Europe.
- The U.S. first hit Chinese goods with Section 301 tariffs ranging from 7.5% to 100% in 2018, then added a further 12.5% on July 24, 2026 for forced-labour compliance gaps — prompting exporters to route goods through jurisdictions where 'limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin.'
Why it matters: OTEA pegs $67 billion in China-origin goods routed through India, Mexico, and Vietnam in 2025 at $28 billion in lost U.S. tariff revenue. India already carries a 10% U.S. tariff over forced-labor concerns; up to 100% duties over Russian oil and a USTR excess-capacity probe remain pending — piling separate tariff fronts onto one trading partner simultaneously.
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