India was the alternative to China. Trump ended that.

The change in US policy has caused India to reconsider its China strategy, writes Alex Travelli from New Delhi

- 

President Donald Trump's 50% tariffs landed like a declaration of economic war on India, undercutting enormous investments made by American companies to hedge their dependency on China.

India's hard work to present itself to the world as the best alternative to Chinese factories — what business executives and big money financiers have embraced as part of the China Plus One strategy — has been left in tatters.

Now, less than a week since the tariffs took full effect, officials and business leaders in New Delhi, and their American partners, are still trying to make sense of the suddenly altered landscape.

Just how much things have changed was evident from Prime Minister Narendra Modi's visit to China over the weekend to meet with Xi Jinping, China's top leader. Trade and political relations between India and China have been strained, at times severely, and it was Modi's first trip there in seven years.

The China Plus One approach has been critical to India's budding ambitions to become a factory powerhouse. Manufacturing growth, especially in high-end sectors such as technology, was seen by India as addressing chronic problems such as the underemployment of its vast population of young workers. Now pursuing that path, without the support of Washington, and in potentially closer coordination with China, promises to be even more difficult.

Trump's tariffs are already causing dislocation in supply chains. India has been rendered far less enticing to American importers. Companies can go to other places for lower tariffs, such as Vietnam or Mexico. A US court ruling, which on Friday invalidated the tariffs but left them in place while Trump appeals, did nothing to repair the rupture between the countries.