The Morning Edge: US Slaps 104% Tariffs on China as Global Economy Braces for Impact

The trade war between the US and China has entered dangerous new territory. At the stroke of midnight, the US will impose staggering 104% tariffs on Chinese imports—a dramatic escalation in response to Beijing’s countermeasures. China, refusing to back down, has denounced the move as "blackmail" and vowed to fight back fiercely. But this isn’t just a bilateral showdown—it’s a seismic shift in global trade, one that could upend decades of economic order and push the world closer to a recession.

The ripple effects are already being felt. Citi has slashed China’s 2025 GDP forecast to 4.2%, warning that high tariffs could shave off 1.5 percentage points annually, with an additional 0.6-point drag next year. As tensions mount and negotiations with other trade partners accelerate, one thing is clear: the global economy is on shaky ground.

Data
US small-business confidence fell sharply in March, with the National Federation of Independent Business Small Business Optimism Index dropping 3.3 points to 97.4 — the lowest since November 2016 and below the 51-year average. This marked the third consecutive monthly decline and the steepest drop since June 2022. While the NFIB’s uncertainty index declined 8 points to 96 from February’s near-record high, it remains elevated above historical norms. The data reflects growing unease among small business owners over trade policies, despite initial optimism around tax cuts and deregulation.

Markets
Overnight
US stocks indices fell on Tuesday with S&P 500 falling below 5,000—its first close under this psychological level in nearly a year—as Trump's tariff shockwaves continued to batter markets. The index has now plunged 18.9% from its February 19 peak, teetering on the edge of bear market territory (20% decline), while the Dow and Nasdaq logged their fourth straight day of losses. The selloff accelerated after the US confirmed 104% tariffs on Chinese imports would take effect after midnight, even as the administration scrambled to launch talks with other targeted nations. Amid the carnage, health insurers UnitedHealth and Humana surged 5.4% and 10.7% respectively after Washington announced a 5.06% payment hike for Medicare Advantage plans—a rare bright spot in a market gripped by trade panic. 

US Treasury yield curve between 2-year and 10-year Treasuries widened sharply to 57 basis points—its steepest level in weeks—as the two maturities moved in opposite directions amid volatile trade. The 10-year yield surged 12.6 bps to 4.283%, hitting an 11-day high as investors braced for weak demand at Wednesday’s auction, while the 2-year yield dipped 2.3 bps to 3.715% after briefly touching 3.435% on Monday—its lowest since September 2022. The divergence reflects growing market tension: longer-dated debt faces inflation and supply concerns, while shorter maturities remain supported by expectations that the Fed may need to cut rates if Trump’s tariffs trigger an economic slowdown. 

The US dollar slid further against major currencies on mounting tariff fears, while China’s offshore yuan sank to a record low—highlighting deepening unease in global markets. European equity futures edged higher in response to the latest developments, but the dollar index dropped 0.48% to 102.92, extending its losses as investors digest the fallout from escalating trade tensions.

Brent crude oil prices plunged to a four-year low on Tuesday, with Brent crude sliding $1.39, or 2.16%, to settle at $62.82 a barrel, as markets braced for a potential recession triggered by the intensifying US-China trade war. Since President Trump's sweeping April 2 tariff announcement, benchmark prices have tumbled 16%, reflecting mounting fears over global demand.

Day’s Ledger
Economic Data:

• US weekly crude oil inventories data

Corporate Actions:

• BF Utilities to consider financial results
• Zee Media Corporation to consider fund raising
• Pavna Industries to consider fund raising
• Remsons Industries to consider fund raising

Policy:

• RBI's Monetary Policy Committee meeting outcome
• Cabinet meeting 
• Bank of Japan Governor Ueda speaks
• US FOMC member Barkin speaks 
• US FOMC meeting minutes

Tickers

• Bharat Petroleum Corporation entered a joint venture with Semborp Green Hydrogen India to explore green hydrogen and renewable energy projects nationwide.
• CONCORD BIOTECH received USFDA approval to market Teriflunomide tablets (7 mg and 14 mg), used to treat relapsing multiple sclerosis. The US market is worth $402 million; global size is around $908 million.
• GAIL INDIA incorporated GAIL Global IFSC, a wholly owned finance subsidiary, in Gujarat’s GIFT City to operate within the IFSC framework.
• HOME FIRST FINANCE COMPANY INDIA launched a ₹12.5 billion QIP issue on April 8 with a floor price of ₹1,019.25 per share.
• IRB Infrastructure Developers reported March toll collections of ₹5.57 billion, up 15.8% YoY. FY25 toll revenue rose 23% to ₹63.6 billion from ₹51.69 billion in FY24.
• NTPC declared commercial operations of 90 MW at Dayapar Wind Project Phase-I in Gujarat. Its total operational capacity now stands at 80,020 MW.
• NTPC GREEN ENERGY formed NTPC-MAHAPREIT Green Energy, a 74:26 joint venture with MAHAPREIT, to develop renewable parks in Maharashtra and other states.
• SASKEN TECHNOLOGIES subsidiary acquired 100% of BORQS International Holding Corp for $40 million.  
• SWAN DEFENCE AND HEAVY INDUSTRIES signed a strategic MoU with Garden Reach Shipbuilders & Engineers.

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