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The Trump White House dropped a bombshell trade report Thursday, accusing more than 40 countries of facilitating what it calls "The Great Transshipment Scam" — a systematic scheme through which China's manufacturers route goods through third countries to dodge US tariffs and disguise their true country of origin. The White House Office of Trade and Manufacturing Policy estimates the US is losing between $19 billion and $26 billion in annual tax revenue as a result. Peter Navarro, Trump's top trade adviser, told reporters that "for years, the Great Transshipment Scam has let communist China launder its exports" through a "global Shadow Transshipment Network."
The report places more than 40 countries into three tiers by severity of risk. India has been placed in Tier 1 — the most serious designation — alongside Canada, the EU, Israel, Japan, Mexico, South Korea, and Taiwan. The report states that Chinese manufactured goods, including industrial pumps and compressors, enter US supply chains through India's Pune–Gujarat–Chennai industrial corridor with misleading labels of Indian origin. "A Chinese pump that leaves Pune as Indian is a pump not machined in Cincinnati, Dayton, or Columbus," Navarro stated during the briefing, as reported by Livemint. Chinese manufacturers began routing goods through third countries following the imposition of Section 301 tariffs in 2018. The goods undergo minor processing, relabeling, repackaging, or reclearing — just enough to manufacture a plausible claim of non-Chinese origin. Total illicit transshipments may amount to $60 billion per year, according to the report.
Brazil, Indonesia, Malaysia, Thailand, Turkey, and Vietnam are designated as Tier 2, while Cambodia, the Philippines, Sri Lanka, Singapore, the UAE, and Bangladesh make up Tier 3 — described as "small, opportunistic targets." The White House has not yet implemented specific penalties but said it is reviewing whether to impose anti-transshipment tariffs on countries that fail to crack down. For India, the Tier 1 designation complicates the Modi government's bid to position the country as a safe alternative to China in global supply chains — a strategic argument that Washington is now publicly and explicitly pushing back against.
