The White House’s allegations of Chinese goods rerouted through third countries, including India, risk escalating trade tensions and disrupting India’s manufacturing ambitions amid US tariffs and investigations.
The White House’s latest attack on transshipment has put India back in Washington’s trade sights, this time over allegations that Chinese goods are being rerouted through third countries to avoid US tariffs. According to the report described by The Hindu, the administration says more than 40 economies face “elevated illegal transshipment risk”, with India listed among the main conduits alongside Mexico, Canada, the European Union, Japan and South Korea.
The charge is that Chinese exporters are shipping products through countries where only limited processing is carried out before the goods are relabelled, repackaged or documented as if they originated elsewhere. The result, the White House says, is lower tariff liability and a loss of customs revenue for the US. It estimates that roughly $67 billion of goods bound for the American market were transshipped from China through major hubs in 2025, costing the Treasury about $28 billion in tariff income.
This is not an isolated dispute. Al Jazeera reported in August 2025 that President Donald Trump ordered a 40% tariff on imports judged to have been transshipped through third countries, underscoring how central the issue has become to his trade policy. The Diplomat later noted in January 2026 that Chinese exporters were increasingly relying on rerouted supply chains, particularly through Vietnam, to soften the effect of US tariffs.
India’s inclusion is especially sensitive because trade tensions were already building. In March 2026, both NDTV and Business Standard reported that the US launched fresh trade investigations into India and other partners under Section 301 of the Trade Act, broadening scrutiny to sectors such as steel, aluminium, automobiles, batteries, electronics and chemicals. In July 2026, the Economic Times said India asked Washington to reconsider an additional 12.5% tariff proposal linked to forced-labour compliance gaps, while the South China Morning Post reported that India was later hit with a lower 10% duty after making policy changes on goods made with forced labour.
For India, the concern is not only immediate tariff pressure but also the broader effect on its manufacturing model. The Hindu’s explainer says India has been importing more Chinese intermediate goods, such as electronics components, machinery, chemicals and plastics, to build products domestically for export. If Washington pushes the transshipment case further, that supply chain could become more expensive and less competitive, complicating New Delhi’s effort to turn “Make in India” into a globally viable export strategy.
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