White House advisor Peter Navarro has stated that India is firmly “on our radar” concerning its involvement in the transshipment of Chinese goods aimed at evading steep US tariffs. This warning follows the release of a White House report titled ‘The Great Transshipment Scam: Rise, Scope, and Costs,’ which accuses numerous countries of facilitating China’s efforts to bypass American trade barriers.
Navarro described China’s strategy to circumvent tariffs as “mind-numbing,” noting that over 40 countries, both large and small, are implicated. Mexico was highlighted as a major participant, with South Asian nations, including India, also playing a significant role in this alleged “modern form of smuggling.”
The Transshipment Scam Explained
The report, primarily authored by Navarro, details how China began developing methods for transshipment soon after the US imposed historic tariffs in 2018 to protect American workers. In its simplest form, Chinese goods are shipped to a third country, where their labels are altered. These goods are then rerouted to the US, often benefiting from lower tariff rates due to existing trade agreements between China and the third country.
The White House report specifically named Indian cities – Gujarat, Chennai, and Pune – as ‘ugly sister cities’ to Cincinnati, Dayton, and Columbus. This term was used to illustrate pairs of foreign and US production/trade hubs linked by the same products, such as pumps and compressors. These Indian locations are allegedly used as conduits for Chinese goods before they enter the US market, undermining American manufacturing and employment.
Economic Impact on the US
The economic ramifications of this transshipment scheme are substantial. The report estimates that the US loses between $19 billion and $26 billion in annual tariff revenue due to these diverted imports, predominantly from China. Furthermore, it suggests that for every $1 billion in diverted imports, approximately 6,000 jobs in the US could be displaced, both directly and indirectly. Navarro emphasized that the US government has been actively working on solutions to address this issue for several years.