Kathmandu— The White House has accused India of operating within a “shadow transshipment network” that facilitates Chinese tariff evasion, adding strain to the existing complex relationship between Washington and New Delhi. The report, titled ‘The Great Transshipment Scam,’ identifies over 40 US trading partners allegedly involved in rerouting goods through third countries to avoid steep American tariffs imposed on China. Concerns center around practices where goods originating from China are relabeled or routed through nations with lower tariff rates before entering the United States. Peter Navarro, a top trade advisor to former President Donald Trump, authored the report which details how certain production hubs within India contribute to this alleged scheme.

Report Details Alleged Transshipment Practices

The White House report categorizes countries involved in the transshipment network into three groups based on their level of integration and risk. India falls into the first category, alongside nations like Canada, the EU, Israel, Japan, Mexico, South Korea, and Taiwan, where transshipment activity is embedded within broader legitimate trade flows. According to Navarro, a specific production belt spanning Pune, Gujarat, and Chennai in India absorbs pumps and compressors, impacting industrial supply chains in American cities such as Cincinnati, Dayton, and Columbus. He stated that goods originating from China and relabeled as Indian-made effectively displace domestic manufacturing in the US.

US Trade Policy and Tariffs

China currently faces an average of 23.2% tariffs on exports to the United States, while India is subject to 10% tariffs on approximately 70% of its exports. The report highlights a history of trade tensions between the US and both countries; India previously faced tariffs as high as 50% from the Trump administration before they were overturned by a US court earlier this year. Despite these challenges, New Delhi has yet to finalize a comprehensive trade deal with Washington, even amidst ongoing investigations and new sanctions legislation targeting those who purchase Russian oil.

Enforcement Measures Proposed

The report urges swift action against countries facilitating tariff evasion, recommending measures such as immediate interdiction of goods, penalty tariffs, sanctions, and potential loss of market access. Estimates for the annual value of transshipped goods range widely, from $40 billion to $303 billion depending on the methodology used. US Customs and Border Protection is reportedly utilizing an AI-driven system incorporating anomaly detection and link analysis to identify these practices.

New Delhi has not yet issued a response to the report’s allegations. The findings are expected to further complicate trade relations between the United States and India as both nations navigate ongoing economic and geopolitical challenges.

(With inputs from RT)

Originally published on abcnews.com.np.