China Responds with Tariff Retaliation Against US: Economic & Diplomatic Implications Intensify

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Massive Tariff Hike by China in Retaliation In a sharp escalation of the ongoing trade conflict, China has announced an increase in tariffs on US goods—from 34% to a steep 84%—starting April 10. The move comes directly in response to US President Donald Trump’s imposition of a 104% tariff on Chinese imports, declared during the US "Liberation Day" address. The tariff war between the two largest economies has been intensifying. President Trump warned that unless China rolled back its 34% tariff within 24 hours, the US would impose additional duties and halt all ongoing talks. China’s decision to raise tariffs by 50 points—mirroring the US move—signals a strong and calculated response. White House’s Aggressive Stand White House Press Secretary Karoline Leavitt defended the 104% tariff, asserting that retaliation was expected and that the US would “punch back harder.” She emphasized that the Trump administration is no longer willing to tolerate trade practices that, in its ...
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Trump’s Tariff Shock Triggers FPI Exodus: ₹10,355 Cr Pulled from Indian Equities in April’s First Week



Heavy Foreign Portfolio Investor (FPI) Outflows Hit Indian Markets

In the wake of US President Donald Trump’s aggressive reciprocal tariff announcement, foreign investors have begun a significant retreat from Indian equities. According to data from the National Securities Depository Ltd (NSDL), FPIs sold equities worth ₹10,355 crore between April 2 and April 4, marking one of the steepest outflows in recent times.

From Easing in March to Panic in April

March had witnessed a moderation in foreign outflows, with net selling reduced to ₹3,973 crore—a major improvement from February’s outflows of ₹34,574 crore. However, April began on a volatile note, with global market panic following President Trump’s tariff declaration on multiple nations, including India.

The announcement, coinciding with US Liberation Day, triggered a global sell-off. In just two days, the US stock market lost around $5.4 trillion in market capitalization, sparking widespread investor anxiety.

Ripple Effect on Global Financial Markets

The effects of the tariff shock were not limited to equities. The US corporate debt and IPO markets also came to a virtual standstill, with no new corporate debt issuances and several IPOs postponed due to heightened uncertainty.

As a result, investors across the globe have adopted a "wait-and-watch" strategy, pulling back capital amid fears of an escalating trade war.

Expert Insights: Sentiment Recovery May Take Months

Renowned market expert Ajay Bagga explained that the recent FPI pullout is driven largely by liquidity concerns and not a structural negative outlook on India.

“We don’t expect sharp inflows for now into the Indian markets till there is some semblance of order created out of the disorder unleashed by Trump tariffs,” Bagga told ANI.

He emphasized that unless trade negotiations are concluded quickly, market sentiment recovery could take several months. However, a swift resolution of the ongoing trade tensions could reverse the trend and restore investor confidence sooner than expected.

India’s Economic Fundamentals Remain Intact

Despite the temporary turbulence, Bagga pointed out that India remains fundamentally strong, with limited direct exposure to US trade measures.

“The USD 80 billion of Indian exports to the US are too small a number in comparison to the scale of the USD 4.2 trillion Indian economy,” he added.

This suggests that while short-term capital flows may remain volatile, India’s long-term investment case remains intact, particularly for long-horizon investors focused on fundamentals.

Conclusion: Uncertainty Looms but Optimism Endures

As foreign investors react to global trade volatility, India is navigating a tricky external environment. However, resilient economic fundamentals and a strong domestic market provide a buffer against external shocks.

The coming weeks will be crucial as trade negotiations unfold and investors recalibrate their strategies in light of unfolding geopolitical and economic developments.

Location: Pune, Maharashtra, India

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