{"id":119369,"date":"2026-08-16T10:50:25","date_gmt":"2026-08-16T05:20:25","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=119369"},"modified":"2026-08-16T12:56:19","modified_gmt":"2026-08-16T07:26:19","slug":"shadow-transhipment-network","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/shadow-transhipment-network\/","title":{"rendered":"US Shadow Transhipment Network Report Flags India: Trade Ties Under Scrutiny"},"content":{"rendered":"<h2><b>Shadow Transhipment Network Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Trump administration released a report titled &#8220;<\/span><b><i>The Great Transhipment Scam: Global Evasion and Economic Costs<\/i><\/b><span style=\"font-weight: 400;\">,&#8221; naming India among 40+ countries allegedly helping China evade US tariffs by routing goods through third countries.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India has been placed in the <\/span><b>highest-risk category<\/b><span style=\"font-weight: 400;\">, raising concerns ahead of the ongoing India-US trade agreement negotiations.<\/span><\/li>\n<\/ul>\n<h2><b>What Is the Shadow Transhipment Network?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A Shadow Transhipment Network refers to an alleged global system where Chinese exporters send goods through intermediate countries before they reach the US, in order to <\/span><b>bypass steep American import tariffs<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In these transit hubs, the goods undergo minor assembly, relabelling, or repackaging, allowing them to be documented as products of the transit country rather than China, thereby evading US customs duties.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This practice is believed to have expanded significantly after 2018, when the US administration imposed sweeping tariffs on Chinese imports.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Facing higher duties, Chinese exporters increasingly rerouted shipments through third countries to preserve access to the American market at lower cost.<\/span><\/li>\n<\/ul>\n<h3><b>US Report on Tiers Based Transhipment Risk<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The White House report, prepared by the Office of Trade and Manufacturing Policy (OTMP), classifies countries into three tiers based on transhipment risk:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Tier 1<\/b><span style=\"font-weight: 400;\"> \u2013 India, Mexico, Canada, and the European Union, where illegal transhipment risk is &#8220;embedded&#8221; within large volumes of legitimate trade.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Tier 2<\/b><span style=\"font-weight: 400;\"> \u2013 Vietnam, Malaysia, and Thailand, described as &#8220;closely integrated&#8221; with China.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Tier 3<\/b><span style=\"font-weight: 400;\"> \u2013 Cambodia, Panama, and the UAE, flagged for &#8220;weak customs enforcement.&#8221;<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Department of Commerce&#8217;s Office of Trade and Economic Analysis (OTEA) estimated that around $67 billion in US-bound goods were transhipped from China via Mexico, India, and Vietnam in 2025, causing an estimated $28 billion in lost tariff revenue.<\/span><\/li>\n<\/ul>\n<h2><b>India Specific Allegations: The Pune-Gujarat-Chennai Corridor<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The report singles out India&#8217;s Pune-Gujarat-Chennai industrial corridor, calling it one of the &#8220;<\/span><b>ugly sister&#8221; cities of global trade<\/b><span style=\"font-weight: 400;\">, allegedly used for routing pumps and compressors (HS codes 8413-8414) that pressure US industries in Cincinnati, Dayton, and Columbus.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, the Global Trade Research Initiative (GTRI), a New Delhi-based think tank, countered this claim with trade data:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">India exported liquid pumps worth $1.61 billion globally in FY2026, including $414.5 million to the US, while importing only $326.4 million from China.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">India exported air pumps and gas compressors worth $1.48 billion globally, including $335.4 million to the US, against $1.63 billion imported from China.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">GTRI argued that India&#8217;s substantial global exports in these categories weaken the presumption that its US-bound shipments are merely rerouted Chinese goods.<\/span><\/li>\n<\/ul>\n<h2><b>Similar Allegations Against Other Countries<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The report extends similar claims to other Asian manufacturing hubs:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Vietnam&#8217;s Ho Chi Minh City corridor is linked to electrical switching equipment, affecting US industries in Chicago, Milwaukee, and Rockford.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Malaysia&#8217;s Penang-Kulim cluster is tied to plastic articles, impacting plastics production in Akron and Canton.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Indonesia&#8217;s Bekasi-Batam corridor is linked to plastic packaging goods.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Thailand&#8217;s Ayutthaya-Samut Prakan corridor is associated with thermostats.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Why This Matters: Laying Groundwork for New Curbs<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trade experts believe the report may pave the way for fresh tariff action through Congress, especially after the US Supreme Court struck down the earlier reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) in February 2025 for exceeding presidential authority.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India&#8217;s tier-1 categorisation signals that the US will likely seek a clause in the upcoming trade deal <\/span><b>committing India to act against transhipment practices<\/b><span style=\"font-weight: 400;\">, and that transhipment-prone Indian exports may already face greater scrutiny.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other experts criticised the report for failing to distinguish between genuine transhipment and exports based on legitimate domestic value addition, urging India to question the report&#8217;s basis and conclusions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Experts also linked this report to a broader pattern of pressure, alongside the US Senate&#8217;s law permitting up to 100% tariffs on major buyers of Russian oil, suggesting the Trump administration is building leverage for future trade actions, possibly including new Section 301 tariffs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The report&#8217;s timing is significant, coming as India and the US negotiate a bilateral trade agreement.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Being placed in tier 1 could mean India faces pressure to demonstrate reduced dependency on Chinese inputs and to commit to stronger anti-transhipment measures as part of any final deal.<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The US transhipment report reflects Washington&#8217;s broader strategy of shifting tariff pressure from China alone to its trading partners, including India.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While India has strong counter-data on genuine manufacturing capacity, the episode underscores the delicate balance India must strike between deepening trade ties with the US and safeguarding its manufacturing credibility on the global stage.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/india-us-china-transhipment-network-trump-report-10834483\/lite\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.ndtv.com\/world-news\/shadow-network-us-names-india-among-40-hubs-of-chinas-tariff-evasion-11908141\" target=\"_blank\" rel=\"nofollow noopener\">NDTV<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>US report flags India\u2019s shadow transhipment network, alleging China-linked rerouted exports amid India-US trade deal negotiations.<\/p>\n","protected":false},"author":18,"featured_media":119409,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,9563,22,59],"class_list":["post-119369","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-mains-articles","tag-shadow-transhipment-network","tag-upsc-current-affairs","tag-upsc-mains-current-affairs-tag","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/119369","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=119369"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/119369\/revisions"}],"predecessor-version":[{"id":119410,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/119369\/revisions\/119410"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/119409"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=119369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=119369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=119369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}