Washington: US Thursday accused more than 40 countries, including India, of operating a “shadow transhipment network” to help China evade high tariffs and unveiled plans to use artificial intelligence (AI) to detect and penalise such practices.
In a report titled ‘The Great Trans shipment Scam’, Peter Navarro, President Donald Trump’s top trade adviser, said transshipments had become more prevalent after 2018, when the Trump administration imposed Section 301 tariffs on China to counter what it described as “unfair trade practices”. “For years, the great transhipment scam has let Communist China launder its exports through more than 40 countries,” Navarro told reporters.
According to Navarro, the countries that comprise China’s shadow transhipment network include Mexico, Canada, India, Japan and South Korea. “China began using these third countries for minor processing, relabeling, repackaging, reinvoicing or routing changes that created the appearance of a new national origin while leaving the underlying Chinese content largely intact,” Navarro said in the report. He said that by routing goods around the tariffs, China and its state-supported manufacturers and trading firms could push goods into jurisdictions with cheap labour, weak customs oversight, permissive free zones or preferential US trade access. The report said India’s Pune, Gujarat and Chennai production belt absorbs pumps and compressors, affecting industrial supply chains in Cincinnati, Dayton and Columbus.
The report estimated the annual value of illegally transhipped goods at anywhere between approximately USD 40 billion and USD 303 billion, depending on the methodology and definition used. The US announced that it would use an AI-enabled system to identify transhipped goods reaching American shores.
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