The United States plans heavy tariffs on several countries, including India and China. Meanwhile, Washington has made another major allegation involving global trade. It claims India, Canada and over 40 countries help China avoid steep tariffs. According to the accusation, these nations support a “shadow trans-shipment network.” Furthermore, the Trump administration plans using artificial intelligence to detect such activity and impose penalties.
A report titled The Great Transshipment Scam details these allegations. President Donald Trump’s chief trade adviser Peter Navarro discussed the alleged practice there. According to him, trans-shipment became increasingly common after 2018. That year, the Trump administration imposed Section 301 tariffs against China. Officials described those duties as measures against “unfair trade practices.”
Navarro said this alleged network has helped Communist China route exports through more than 40 countries for years. He claimed exporters present those shipments as products originating elsewhere. The listed network includes several major American trading partners. Mexico and Canada appear alongside the European Union, India, Japan and South Korea.
Navarro Explains How Goods Allegedly Change Their Origin
According to Navarro, China began using third countries for limited processing or relabelling. Companies could also use repackaging, reinvoicing or altered shipping routes. Such steps may make products appear manufactured elsewhere. However, Navarro claimed those goods still contain mostly Chinese material.
He further alleged that Chinese manufacturers and trading companies exploit locations offering specific advantages. These may include cheaper labour and weaker customs monitoring. Loosely regulated free zones can also provide opportunities. Additionally, special trade arrangements with America may make certain destinations attractive.
The report specifically mentions India’s Pune-Gujarat-Chennai production belt. According to its claim, this corridor receives pumps and compressors. Navarro argued that such activity affects industrial supply chains around Cincinnati, Dayton and Columbus.
He said a Chinese pump leaving Pune as Indian merchandise does not undergo machining in those American cities. Therefore, the report presents this example while questioning product origin.
US Plans AI-Based ‘Detective Border’ to Track Shipments
The report estimates annual illegally trans-shipped goods between roughly $40 billion and $303 billion. However, that range changes depending on methodology and definitions.
Washington now wants stronger detection measures. Navarro announced an AI-enabled system called “Detective Border” for identifying trans-shipped goods reaching American shores.
The system will combine shipment data with routing history and product classifications. It will also examine ownership relationships plus production-capacity indicators. Furthermore, authorities plan using anomaly-detection systems and computer vision. Other analytical tools will support US Customs and Border Protection.
According to the report, this system should distinguish legitimate nearshoring from illegal pass-through trade. It also aims to separate genuine foreign investment from suspicious routing.
Additionally, authorities want to identify higher-risk shipments more effectively. Analytical findings could then support inspections, duty collection, penalties and bans.
