Washington’s intensified measures against tariff evasion threaten Indian exporters and could reshape Asian supply networks amid new enforcement tactics and compliance hurdles.
Washington has escalated its campaign against tariff evasion, accusing India and more than 40 other economies of being used as routes for Chinese goods to enter the US market with reduced duties. According to the White House Office of Trade and Manufacturing Policy, the so-called “Great Transshipment Scam” involves rerouting products through third countries, relabelling them or falsely claiming a new country of origin. India was placed in the report’s top tier of large industrial economies, alongside Canada, the European Union, Japan, Mexico, South Korea and Taiwan, a grouping officials said reflects both legitimate trade and a heightened risk of abuse.
The move could create serious compliance problems for Indian exporters, particularly in machinery, electrical equipment, consumer optical products and semiconductors, Moody’s Ratings has warned. Companies shipping to the US would need to show that products underwent substantial transformation in India rather than simple assembly or minor finishing, a distinction that may prove difficult in tightly integrated Asian supply chains. The Indian Express has noted that the crackdown comes as India’s own manufacturing base remains heavily dependent on Chinese inputs.
Officials in Washington say the enforcement push will be backed by tougher customs powers, an AI-based screening system to flag suspect shipments before they arrive at US ports, and new anti-transshipment clauses in future trade deals. Reuters-style accounts of the briefing said the administration is not framing the issue solely as a China problem, but it named Vietnam, Cambodia, Malaysia, Indonesia and the Philippines as key hubs, while also warning that other high-tariff economies could be drawn in. The same rules could apply to any tariff agreement with India, even as New Delhi and Washington continue separate talks over a reciprocal trade deal.
The Financial Times has reported similar concerns from economists and trade analysts who argue that the threat of an additional 40 per cent levy on transshipped goods may already be reshaping supply chains. Goldman Sachs has warned that tariff evasion could cost the US government as much as $40 billion in annual revenue, while previous reporting has suggested that exporters and customs brokers still lack clear guidance on the rules of origin that will determine whether a shipment is treated as legitimate or transshipped. That uncertainty leaves many firms facing the prospect of stricter enforcement before the full mechanics of the policy are settled.
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