The United States has accused more than 40 nations, including India of participating in a massive “shadow trans-shipment network,” which helps China to evade aggressive trade duties. In a newly released report titled ‘The Great Transshipment Scam’, top White House trade adviser Peter Navarro revealed that Washington will now deploy advanced Artificial Intelligence (IAI) models to detect these illegal rerouting pipelines and execute strict enforcement actions against non-compliant trading partners.

US Accuses India, 40+ Nations of China Trade Duty Evasion

Navarro stated that the illegal transshipment of Chinese goods increased after 2018 following the imposition of Section 301 tariffs. The Great Transshipment Scam report estimates the annual value of these illicitly rerouted goods between USD 40 billion and USD 303 billion, depending on the definitions used. Releasing the report, Navarro said, “For years, the great transshipment scam has let Communist China launder its exports through more than 40 countries.”

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According to Navarro, this network includes some of America's most critical trading partners. He explicitly named Canada, Mexico, India, Japan, South Korea, and the European Union. “China began using these third countries for minor processing, relabelling, repackaging, reinvoicing, or routing changes that created the appearance of a new national origin while leaving the underlying Chinese content largely intact,” Navarro said as per the report.

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Navarro explained that by routing goods around the tariffs, China uses places with cheap labor, weak customs oversight, permissive free zones, or preferential US trade access to push their products into the American market. According to Navarro, the Pune-Gujarat-Chennai production belt in India absorbs Chinese pumps and compressors, directly impacting industrial supply chains in US cities such as Cincinnati, Dayton, and Columbus. He highlighted that these Chinese products, re-exported as Indian, displace American manufacturing jobs in those specific regions.

US To Deploy AI Tool

He further stated that Washington is planning to bring in an artificial intelligence tool named “Detective Border” to help identify goods that reach the US after passing through third countries. The tool is expected to analyse shipment records, routing history, product classification, ownership links, production capacity, anomaly detection and computer vision.

“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 noted.

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