US Great Transshipment Scam Report Has 'Big Allegations, Little Evidence', Says GTRI

India has been placed in the highest-risk tier in a new White House report examining alleged attempts by China-linked exporters to route goods through third countries to avoid higher US tariffs.

However, trade think tank Global Trade Research Initiative (GTRI) has questioned the evidence behind the findings, calling the report a case of "big allegations, little evidence".

The White House report titled, 'The Great Transshipment Scam: Rise, Scope, and Costs', released on August 13, alleged that Chinese exporters have increasingly used third-country production and logistics networks after US tariffs on Chinese goods were imposed under Section 301 in 2018.

The practice can involve relabelling, repackaging, re-invoicing, minor processing or false country-of-origin declarations to obtain lower tariff treatment.

However, the White House also acknowledged that changes in sourcing patterns alone do not establish illegal transshipment, as they may reflect genuine investment and supply-chain diversification.

India has been placed in Tier 1 Risk Category alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan.

The category covers large, diversified economies handling substantial volumes of China-linked goods, rather than constituting an India-specific finding of customs fraud or an automatic tariff action.

What GTRI Says On White House Report

According to GTRI, the White House report fails to distinguish adequately between illegal origin fraud and legitimate manufacturing involving Chinese components.

Goods substantially transformed in India, Mexico or Vietnam are genuine exports of those countries and cannot automatically be treated as Chinese transshipment merely because Chinese inputs were used, it said.

GTRI also argued that aggregate trade data do not prove rerouting. While US imports from China fell from $525.8 billion in 2017 to $327.5 billion in 2025, America's overall imports rose from $2.41 trillion to $3.50 trillion, suggesting tariffs largely changed sourcing patterns rather than reducing import dependence, GTRI said.

The White House report cites an estimated $67 billion of goods allegedly transshipped through India, Mexico and Vietnam in 2025, but does not reveal India's share, identify an Indian exporter or point to a specific fraudulent shipment, it noted.

India-Specific Concerns

The White House specifically highlighted India's Pune-Gujarat-Chennai manufacturing belt over pumps and compressors under HS codes 8413 and 8414.

However, GTRI said India has substantial manufacturing capacity in these products.

In FY2026, India exported liquid pumps worth $1.61 billion globally and air pumps and gas compressors worth $1.48 billion, weakening any presumption that US-bound shipments are merely rerouted Chinese goods.

GTRI said India should seek country-, product- and shipment-level evidence from the US and investigate the identified product categories to detect any genuine misuse while protecting legitimate exporters from unsupported action.