Washington’s intensified focus on transshipment and tariff evasion is set to complicate supply chains for Indian manufacturers, amid warnings from Moody’s about increased compliance burdens stemming from stricter US enforcement actions.
Washington’s new campaign against tariff evasion is adding another layer of strain to India’s trade outlook, with Moody’s Ratings warning that stricter US action on trans-shipped goods could create major compliance burdens for manufacturers in sectors such as machinery, electrical equipment and semiconductors. The concern is not that India is being accused of wrongdoing, but that its deep links with Chinese supply chains may draw sharper scrutiny from US customs officials.
According to the latest assessment cited by the original report, India sits in a top-risk group alongside economies including Canada, Japan, South Korea, Taiwan, Mexico, Israel and the European Union. The US approach focuses on countries with large manufacturing bases and complex supply networks, where officials say it can be harder to establish whether goods have been genuinely made locally or simply routed through intermediate markets.
At the centre of the crackdown is transshipment, a routine feature of global commerce that becomes problematic when firms use a third country to conceal Chinese origin and sidestep US tariffs. US officials and lawmakers have argued that practices such as relabelling goods, filing false origin documents or carrying out only minimal processing can amount to evasion if a product has not undergone substantial transformation before export. Republican and Democratic members of the House Select Committee on the Chinese Communist Party have also pressed for tougher enforcement against such practices.
The enforcement push is moving beyond policy language. US Customs and Border Protection has awarded Exiger a multi-million dollar contract to help detect illicit transshipment with Trade AI, a system designed to scan supply-chain data for suspicious patterns. PwC said President Donald Trump signed Executive Order 14411 on June 3, 2026, directing the Department of Homeland Security and CBP to tighten customs enforcement, raise disclosure standards and increase penalties.
For Indian exporters, the practical impact could be significant even without any formal finding of misconduct. Companies may need to document more clearly where goods are made, how far they are processed and whether imported parts have been substantially transformed. That matters especially in industries where production is spread across several countries and where a final assembly step may not be enough to satisfy US origin rules.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
