IRGS2+ GS3

White House report names India among top enablers of China's tariff evasion

Indian Express, The Hindu·2026-08-15

"White House report names India among top enablers of China's tariff evasion"

Prelims Facts

  • •Section 301 of the Trade Act of 1974 authorises the US President to impose unilateral tariffs on countries for unfair trade practices — no WTO ruling is required.
  • •The US imposed tariffs of 7.5%–100% on Chinese goods under Section 301 from 2018 onward; a further 12.5% was added for forced-labour compliance gaps.
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Key Terms

Section 301 Tariffs

US duties on Chinese goods under the Trade Act of 1974, citing unfair trade practices.

Transshipment

Routing goods through an intermediate country to obscure their true origin and evade tariffs.

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Study Note

BackgroundCore Concept

Background

The current episode of India-US trade friction is rooted in a broader restructuring of global trade architecture that began when the US imposed Section 301 tariffs on Chinese goods — invoking the Trade Act of 1974 — citing unfair trade practices, intellectual property theft, and forced technology transfer. These tariffs, which escalated significantly from 2018 onward, created powerful incentives for Chinese manufacturers to reroute exports through third countries to avoid steep duties. The practice of transshipment — routing goods through an intermediate country to obscure their true origin — is not new, but its scale expanded dramatically as the US-China trade war intensified.

India's own trade relationship with the US has been marked by recurring friction: the revocation of Generalised System of Preferences (GSP) benefits in 2019, disputes over agricultural market access, digital trade norms, and ongoing Bilateral Trade Agreement (BTA) negotiations. India's simultaneous positioning as a strategic partner of the US (through the Quad, iCET, and defence technology agreements) and as a country with deep economic linkages with China creates a structurally complex situation that this accusation now sharpens. The WTO Agreement on Rules of Origin requires that goods undergo 'substantial transformation' to qualify for a new country-of-origin designation, but enforcement is uneven and definitions vary across jurisdictions — a gap that the US report argues is being systematically exploited.

The Topic Explained

Transshipment as a trade practice occupies a grey zone in international trade law. Legitimate nearshoring — where a company genuinely relocates production to a third country — is legal and encouraged under WTO norms. What the US report targets is pass-through trade: minimal processing, relabelling, or repackaging of Chinese goods in a third country to obtain a different certificate of origin, without substantive value addition. This allows exporters to sidestep Section 301 tariffs that can reach punitive levels, effectively nullifying the trade-policy intent of the US measures.

The legal standard at the heart of this dispute is the concept of substantial transformation — the requirement under the WTO Agreement on Rules of Origin that a product must be meaningfully altered in the intermediate country for it to acquire that country's origin. Mere relabelling, repackaging, or minimal assembly does not meet this threshold. …

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Related PYQs

2016GS1 Prelims

In the context of which of the following do you sometimes find the terms 'amber box, blue box and green box' in the news?

AWTO affairs
BSAARC affairs
CUNFCCC affairs
DIndia-EU negotiations on FTA
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2024GS1 Prelims

Consider the following statements:

Statement-I:

India does not import apples from the United States of America.

Statement-II:

In India, by law, the import of genetically modified transformed food is prohibited without the approval of the competent authority.

Which one of the following is correct in respect of the above statements?

ABoth Statement-I and Statement-II are correct and Statement-II explains Statement-I
BBoth Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
CStatement-I is correct, but Statement-II is incorrect
DStatement-I is incorrect, but Statement-II is correct
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Practice MCQs

IRmedium

Section 301 of the Trade Act of 1974, frequently cited in US-China and US-India trade disputes, is best described as:

AA WTO-mandated mechanism requiring multilateral approval before tariffs can be imposed on unfair trade practices
BA US domestic law authorising unilateral tariffs on countries engaged in unfair trade practices, without requiring a WTO ruling
CA bilateral treaty provision between the US and China governing intellectual property enforcement
DA US Congressional resolution that must be ratified by the Senate before tariffs take effect
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IRhard

Which of the following best explains why the WTO Appellate Body's near-paralysis limits India's ability to challenge US Section 301 tariffs through multilateral channels?

AThe Appellate Body's paralysis means WTO panels can no longer initiate dispute settlement proceedings at the first-instance level
BWithout a functioning Appellate Body, the US can appeal any adverse WTO panel ruling 'into the void', effectively nullifying the ruling without complying
CThe Appellate Body's paralysis prevents India from filing a dispute complaint with the WTO Dispute Settlement Body
DWTO rules require Appellate Body approval before a member state can invoke the dispute settlement mechanism against Section 301 tariffs
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