A White House report identifies India among third countries accused of facilitating the transshipment of Chinese goods to bypass US import duties, leading to significant tariff revenue losses for the US and impacting domestic manufacturing. The report details how Chinese exporters reroute goods through these nations, engaging in minimal processing and relabeling to mask their origin, a practice that reportedly escalated after US tariffs were imposed in 2018. In response, US Customs and Border Protection is deploying advanced AI tools to detect such illicit activities and enhance enforcement.

A White House report identifies India among third countries accused of facilitating the transshipment of Chinese goods to bypass US import duties, leading to significant tariff revenue losses for the US and impacting domestic manufacturing. The report details how Chinese exporters reroute goods through these nations, engaging in minimal processing and relabeling to mask their origin, a practice that reportedly escalated after US tariffs were imposed in 2018. In response, US Customs and Border Protection is deploying advanced AI tools to detect such illicit activities and enhance enforcement.

A White House report identifies India among third countries accused of facilitating the transshipment of Chinese goods to bypass US import duties, leading to significant tariff revenue losses for the US and impacting domestic manufacturing. The report details how Chinese exporters reroute goods through these nations, engaging in minimal processing and relabeling to mask their origin, a practice that reportedly escalated after US tariffs were imposed in 2018. In response, US Customs and Border Protection is deploying advanced AI tools to detect such illicit activities and enhance enforcement.

A White House report released on Thursday has accused India of being among the third countries which help transship Chinese goods to avoid US import duties. A report by White House trade and manufacturing adviser Peter Navarro said the US is losing some $19 billion to $26 billion in annual tariff revenue from goods.

Navarro’s report names 40 countries as sources of illegal transshipments of goods, which are minimally processed,  
relabelled and repackaged Chinese-origin components. Besides India, these countries include some of the US’s biggest trading partners, such as Mexico, Canada, the EU, Japan, and South Korea.

"For years, the great transhipment scam has let Communist China launder its exports through more than 40 countries," Peter Navarro, Counsellor to the President for Trade and Manufacturing, told reporters.

The report also cited how the Pune-Gujarat-Chennai production belt absorbs pumps and compressors, affecting industrial supply chains in Cincinnati, Dayton and Columbus. "A Chinese pump that leaves Pune as Indian is a pump not machined in Cincinnati, Dayton or Columbus," Navarro said.

The report traced the origins of the “shadow transhipment network” to 2018, when the Trump administration imposed Section 301 tariffs on select Chinese goods to remedy America’s growing trade deficit with China. “After their imposition, Chinese exporters increasingly routed goods through third countries. Products that previously moved directly from China to the United States were shipped through jurisdictions where limited assembly, finishing, repackaging, relabeling, or documentation changes could create the appearance of a different national origin,” the report says.

China managed to use this transhipment scheme to fuel imports that dropped due to Trump’s prior tariffs.

The U.S. Customs and Border Protection agency is now
deploying AI tools to better detect suspected transhipment of
goods, the report said. Learning models analyse container
markings, packaging patterns and X-ray imaging to detect
mismatches between declared and actual cargo, it said.

"The objective is to improve CBP's ability to distinguish legitimate nearshoring and foreign investment from illegal pass-through trade, identify high-risk shipments, and convert analytical findings into interdiction, duty collection, penalties, and exclusion," the report said.

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