The United States has accused India of violating fair trade practices, alleging that the country is helping China evade U.S. tariffs. A recent White House report titled ‘The Great Transhipment Scam’ identified over 40 countries, including India, as being involved in this practice. According to the report, Chinese exporters have been routing goods through third countries to avoid tariffs, with India being one of the top ‘enablers’ of this evasion.
The report states that India, along with other countries such as Mexico, Canada, the European Union, Japan, and South Korea, is importing Chinese goods, making minor modifications, and then exporting them to the U.S. at lower tariffs. This has resulted in significant revenue loss for the U.S. government, with an estimated $28 billion in lost tariff revenue in 2025. The U.S. has imposed tariffs on China in the past, including a 7.5% to 100% tariff on goods such as electric vehicles, semiconductors, and medical products in 2018.
However, the report suggests that this has not reduced U.S. imports from China, but rather led to a shift in the source of imports to other countries. The U.S. has also imposed additional tariffs on India, including a 10% tariff on imports for not doing enough to curb the import of goods made using forced labor. The latest allegations against India could have significant implications for the country’s economy.
India’s growth story relies heavily on imports from China, which are used to manufacture finished goods within the country. If India is forced to curb these imports, its manufacturing costs will rise, making Indian products less competitive globally. The U.S. has also launched investigations into India’s trade practices, including a probe into excess capacity, which could potentially lead to further tariffs.
The U.S. Senate has also passed a bill that would result in tariffs of up to 100% being levied on India for its Russian oil imports. The bill is waiting to be introduced and passed in the House of Representatives.
The latest allegations against India are not accompanied by penal actions yet, but the possibility remains that the U.S. could impose further tariffs on countries it deems are helping China evade tariffs. The ‘Make in India, For the World’ story still relies heavily on inputs from China, and any disruption to these imports could have significant consequences for Indian manufacturers.
