US Flags India in China Tariff Evasion Network, Names Pune, Gujarat and Chennai

By Thetripurapost Desk, Washington
Aug 15, 2026
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The United States has identified India as part of a global network facing elevated risks of illegal Transshipment, alleging that Chinese-origin goods could be routed through third countries before reaching the American market and thereby avoiding higher China-specific tariffs.

The allegations are contained in a White House report titled “The Great Transshipment Scam: Rise, Scope, and Costs.” The document examines how international supply chains may be used to alter the apparent origin of Chinese products through processing, assembly, repackaging or other activities before export to the US.

The report places India among its Tier 1 economies, alongside several other major trading partners. However, the classification does not mean that Indian exporters or the Indian government have been found to systematically evade US tariffs. The report itself notes that transshipment risks can exist within otherwise legitimate international trade.

Pune-Gujarat-Chennai Belt Highlighted

One of the report's most specific references to India concerns the Pune-Gujarat-Chennai manufacturing belt.

The White House connects the region with the production and trade of pumps and compressors, suggesting that Chinese-origin components could potentially enter these supply chains before finished products are exported to the United States.

The report compares these Indian manufacturing centres with Cincinnati, Dayton and Columbus in Ohio, where similar industrial products are manufactured. The comparison is described through the report's term “ugly sister cities.”

Importantly, the report does not identify a specific Indian company as having violated US customs regulations. It also does not establish that products manufactured in these Indian locations are automatically Chinese-origin goods.

How Chinese Goods Could Reach the US Through Third Countries

The White House report describes a process in which Chinese products or components may first move to another country.

There, goods could undergo limited processing, assembly, finishing, repackaging, relabelling or documentation changes before being exported to the United States.

The concern arises when such activities are insufficient to establish a legitimate change in country of origin but are nevertheless used to claim that the goods originated in the third country. The report describes this as part of a broader “Shadow Transshipment Network.”

Chinese Parts in Indian Products Do Not Automatically Mean Tariff Evasion

The presence of Chinese components in a product manufactured in India is not, by itself, evidence of illegal tariff avoidance.

Global manufacturing routinely involves components sourced from several countries. What matters under origin rules is the nature and extent of processing performed in the exporting country.

A product that undergoes genuine and substantial manufacturing in India cannot simply be classified as a Chinese shipment merely because some of its components originated in China.

The key issue for US customs authorities is therefore whether a product has undergone sufficient “substantial transformation” to acquire a legitimate new country of origin.

Malaysia, Indonesia, Vietnam and Thailand Also in Focus

The White House assessment extends beyond India, identifying manufacturing and trade corridors across several Asian economies.

Malaysia, Indonesia, Vietnam and Thailand are among the countries discussed in connection with China-linked supply chains. The report examines how industrial and export hubs in these countries could potentially serve as intermediate points in international trade routes.

The broader assessment covers more than 40 countries that the White House associates with elevated illegal-transshipment risk.

US Turns to AI to Detect Suspicious Shipments

Washington is also preparing to use advanced technology to strengthen enforcement against suspected tariff circumvention.

The US administration has announced plans to use artificial intelligence and large-scale trade data analysis to identify unusual shipping patterns, examine country-of-origin declarations and trace supply chains.

An AI-enabled system known as “Detective Border” has been highlighted as a tool that could assist US customs authorities in detecting suspicious shipments and identifying potential transshipment activity.

What the White House Report Means for India

The report could add another layer of uncertainty to India-US trade relations, particularly for exporters whose manufacturing chains rely heavily on Chinese components.

At the same time, India's inclusion in the report should not be interpreted as a blanket accusation against Indian manufacturers. The central US concern is whether Chinese goods are being subjected to only minimal processing in India or other third countries before being presented as products originating elsewhere.

For Indian exporters, stronger documentation of manufacturing processes, component origins and value addition could therefore become increasingly important as Washington tightens scrutiny of global supply chains.

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