The United States has implicated India and over 40 nations in helping China reroute goods to evade tariffs, as it prepares to implement an AI-based system to detect illicit shipments, potentially reshaping international trade dynamics.
The United States has accused India and more than 40 other countries of helping Chinese goods reach the American market through indirect trade routes, in what it says is an effort to sidestep tariffs. The allegation comes as Washington prepares to deploy an artificial intelligence-based screening system to flag suspect shipments and separate legitimate trade from goods it believes are being rerouted to evade duties.
According to a report written by Peter Navarro, the White House trade and manufacturing adviser, the scale of suspected illicit trans-shipment could run from $40 billion to $303 billion a year. Navarro said major trading partners, including Mexico, Canada, the European Union, India, Japan and South Korea, were part of what he described as a Chinese “shadow trans-shipment network”.
The claims build on a wider pattern of trade friction that has intensified since the United States imposed Section 301 tariffs on China in 2018. Research on the trade conflict in 2025 shows that the dispute has continued to shape supply chains and global market stability, while congressional testimony earlier this year described how Chinese firms have sought to exploit gaps in enforcement and jurisdiction to dodge tariffs and other restrictions.
Navarro said Chinese manufacturers increasingly routed goods through third countries after the tariff regime tightened, using small product alterations, relabelling, repackaging and rerouting to obscure the original source. He singled out India’s Pune-Gujarat-Chennai industrial corridor, saying it had been used for Chinese pumps and compressors headed for the US market. He argued that the practice can distort supply chains in American industrial centres such as Cincinnati, Dayton and Columbus.
Washington’s planned AI system, dubbed a “detective border” tool in the report, would analyse shipping data, routes, product details, company links and production capacity to identify higher-risk consignments. Officials say the goal is to distinguish lawful foreign investment and trade from goods entering through improper channels, with possible penalties including duty collection, fines and seizure of shipments.
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