A report cited by former White House official Peter Navarro alleges that China is engaging in a widespread scheme to avoid US tariffs, a practice referred to as the 'Great Transshipment Scam.' According to the report, Chinese manufacturers route goods through third-party countries—including India—to perform minor tasks such as relabeling, repackaging, or reinvoicing. These actions are intended to create the false appearance that the products originated in the transit country rather than China, allowing them to bypass existing trade barriers.

The allegations suggest that this strategy is a systemic effort to undermine US trade policy. By routing products through these 40 identified hubs, Chinese exporters reportedly avoid the higher duties imposed on goods directly imported from China. While the report focuses on the mechanics of the evasion, it highlights the difficulty US regulators face in verifying the true origin of complex supply chains. The claims emphasize that even minimal processing in a third country is being used as a loophole to mask the actual source of the merchandise. Currently, there is no mention of specific retaliatory measures against the transit countries themselves, but the identification of these hubs signals a potential shift in how the US monitors global trade routes to ensure tariff compliance.