US targets India, 40+ nations in tariff-dodging "transhipment" crackdown
By Reena Bhardwaj, Washington DC, August 13
A new report by the White House Office of Trade and Manufacturing Policy on Thursday accused more than 40 countries of helping Chinese exporters evade US tariffs by routing goods through third-party territories, relabelling them, or falsely claiming a non-Chinese country of origin, a practice it called the "Great Transhipment Scam."
The report categorises the 40-plus nations into three tiers. India is placed in Tier 1 ("Diversified Scale Leaders") alongside major economies like Canada, the European Union, Israel, Japan, Mexico, South Korea, and Taiwan, described as large industrial bases where transhipment risks are embedded within legitimate trade.
Tier 2 ("Significant Economic Integration with China") includes Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam, while Tier 3 ("Small, Opportunistic Targets") includes Bangladesh, Cambodia, the Philippines, Singapore, Sri Lanka, and the UAE.
Senior trade adviser Peter Navarro explicitly named India during a briefing, warning that as the US imposes higher tariffs, to deter countries like India and Vietnam attempting transhipment.
"This is about the 40-plus countries that are enabling the transshipping, and as we impose higher tariffs on other countries, India, Vietnam, down the line, they're going to try this transhipment too. Our message is simply that the way to pay less is not to cheat; it is to stop dumping, respect intellectual property, drop your barriers to American goods and move towards reciprocity. Our warning to the lower tariff countries facilitating and enabling the transshipping is this: preferential access to the American market is not a license to launder somebody else's exports, said Navarro.
The report cited examples such as Chinese electric motors fitted into recliners in Vietnam or "screwdriver factories" performing minimal assembly to disguise a product's origin without achieving "substantial transformation."
The crackdown coincides with complex trade talks between Washington and New Delhi regarding a reciprocal tariff deal, further complicated by US pressures concerning India's purchases of Russian oil.
The US Trade Representative's office has confirmed that anti-transhipment clauses are now being written into every new deal, with penalties for countries that allow disguised Chinese goods through their ports. Officials said these clauses would be enforced according to their "spirit", meaning countries could face penalties even without a clear-cut violation.
Officials outlined three measures: an executive order strengthening enforcement powers at US Customs and Border Protection (CBP); a new AI-driven monitoring system dubbed a "detective border" that screens shipments for transhipment risk before they reach US ports; and anti-transhipment clauses written into future trade agreements, including any deal with India.
Under the plan, if a shipment is found to have been transshipped, CBP will be able to retroactively claim tariffs on a company's shipments over the previous year, not just the consignment in question.
Although briefing officials repeatedly stressed that the report "is not about China" specifically, they named Vietnam, Cambodia, Malaysia, Indonesia, and the Philippines as key transhipment hubs and said other high-tariff countries would likely follow suit.
The report comes as India continues separate talks with Washington over a reciprocal tariff deal, complicated further by US pressure over India's purchases of Russian oil.
Officials declined to say how the findings might factor into US President Donald Trump's expected meeting with Chinese leader Xi Jinping, saying only that the report would inform the US Trade Representative's approach at the negotiating table.
— ANI
Reader Comments
As someone who follows trade economics, this report raises valid concerns about tariff evasion. But placing India in Tier 1 alongside established economies seems harsh. Our manufacturing sector has legitimate capabilities, not just assembly lines. The US should engage constructively rather than threatening retroactive penalties that will hurt business confidence.
The "detective border" AI system sounds straight out of a surveillance state playbook. 😳 First they monitor our digital lives, now they want to track every container ship? India should respond by strengthening trade relations with other partners like EU and Russia instead of chasing US approval. #MakeInIndia doesn't need American permission.
Honestly, the US has a point about transhipment - I've seen cases in my business where goods get relabeled to avoid duties. But why single out India specifically? China is the actual source of the problem. Seems like the US wants to distract from their own trade war failures by making scapegoats out of developing countries.
Interesting timing for this report - right as US-India trade negotiations heat up. The retroactive tariff clause seems excessive though. One small mislabeled shipment and a company faces penalties for the entire previous year? That's not trade policy, that's hostage-taking. The US needs to learn that respect works better than threats.
The audacity of America talking about "fair trade" when they've been using every loophole possible for decades! 🙄 At least Indian businesses follow actual international norms, unlike Western companies who exploit tax havens. This report is just another tool to pressure India into accepting unfavorable terms. Stay strong, India
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