The White House has found a new explanation for why America’s tariff war with China has not delivered quite what it promised: everyone else is cheating.

A report released on August 13 by the White House Office of Trade and Manufacturing Policy accuses Chinese exporters of building a “Shadow Transshipment Network” spanning more than 40 countries. The alleged scheme involves relabelling, repackaging, re-invoicing or lightly processing Chinese goods before sending them to the US under another country’s origin.

There is a real issue here. Tariff gaps can create incentives to disguise where goods come from. But the report appears to stretch that problem well beyond what its evidence establishes.

The most revealing numbers are the simplest.

US imports from China fell from $525.8 billion in 2017 to $327.5 billion in 2025. But total US imports rose from $2.41 trillion to $3.50 trillion over the same period.

In other words, the tariffs changed where America bought its goods without making America much less dependent on foreign goods. Chinese finished products lost ground, but imports from elsewhere filled much of the space.

That looks less like a manufacturing renaissance than a change in the map of America’s supply chains.

The China Reroute

China, meanwhile, adapted. Rather than simply shipping finished goods directly to the US, Chinese companies increasingly supplied components and intermediate goods to manufacturers in Mexico, Vietnam, India and elsewhere. Those goods can then be processed, assembled or incorporated into new products before being exported to America.

That distinction matters. If a product undergoes substantial transformation in India, Mexico or Vietnam, it is an export of that country under established global value-chain practices. The presence of Chinese inputs does not, by itself, make it Chinese transshipment.

The report’s own numbers do not settle the question. Between 2017 and 2024, Mexico’s exports to the US rose by $194.2 billion, while its imports from China increased by $54.3 billion.

Vietnam’s exports to the US increased by $94.1 billion, against a $90.2 billion increase in imports from China. India’s exports to the US rose by $40.7 billion while its imports from China increased by $52.4 billion.

Those correlations may merit investigation. They do not prove that Chinese goods were rerouted.

India In Crosshairs

India gets particular attention.

It is placed in the report’s highest-risk tier alongside Canada, the European Union, Israel, Japan, Mexico, South Korea and Taiwan.

A US Commerce Department estimate says $67 billion of goods were transshipped through India, Mexico and Vietnam in 2025, producing $28 billion in tariff losses. Yet the report does not say how much of that $67 billion passed through India, identify an Indian exporter or provide a fraudulent shipment.

It singles out the Pune-Gujarat-Chennai corridor for pumps and compressors. But India already has substantial manufacturing capacity in these products.

In FY2026, it exported $1.61 billion of liquid pumps globally, including $414.5 million to the US, while importing $326.4 million from China.

It also exported $1.48 billion of air pumps and gas compressors, including $335.4 million to the US.

Gaps In The Report

The report has four problems.

It blurs transshipment with legitimate manufacturing; treats trade correlations as proof; ignores how country-specific tariffs created incentives for evasion; and proposes tougher origin rules even though the US already applies substantial-transformation standards.

That could make compliance more expensive without necessarily making customs fraud easier to catch. An AI-enabled “Detective Border” could mean more inspections, delays, retrospective duties and penalties.

India should not dismiss the allegations. Nor should it accept them on faith.

The sensible response is evidence. New Delhi should ask Washington for the country-, product- and shipment-level basis of its claims, including India’s share of the $67 billion estimate.

It should examine the specified pump and compressor trade, match Chinese imports with US-bound exports and verify domestic value addition.

If there is fraud, find it. If there isn’t, India should have the evidence to say so.

The larger lesson is that tariffs can redirect trade more easily than they can eliminate dependence on it.

The White House report may have identified a genuine enforcement problem. But changing where goods are made is not the same thing as proving where they came from.