In Brief
- The US has identified India alongside over 40 trading partners as hubs in a "shadow transshipment network" facilitating Chinese tariff evasion.
- Exporters perform minor processing—such as relabeling, repackaging, and reinvoicing—to disguise Chinese goods as local exports.
- The White House plans to deploy an AI-powered detection system ("Detective Border") and enforce retroactive penalties to combat the scheme.
The Donald Trump administration has flagged over 40 US trading partners—including India, Canada, Mexico, Japan, South Korea, and the European Union—as key hubs in a Chinese "shadow transshipment network".
In a White House report titled 'The Great Transshipment Scam', senior trade adviser Peter Navarro outlined how Chinese exporters circumvent steep US levies by routing goods through third-party countries. Exporters perform minor processing—such as relabeling, repackaging, reinvoicing, or minimal assembly—to create the false appearance of a new country of origin while leaving the underlying Chinese content intact.
This practice undermines intended US tariff policies and trade enforcement. To counter the scheme, Washington vowed to deploy an AI-driven detection system dubbed "Detective Border" alongside retroactive tariff penalties to identify and penalize non-compliant imports.
