PM Modi’s China Visit 2025: Trade Diplomacy, US Tariffs, and the Emerging Role of Investment Banking

When the Prime Minister of India, Narendra Modi, recently traveled to China, the world was paying attention. The diplomatic visit was more than a photo opportunity, it had trade implications for the world, supply chains, and finance in India. While the U.S. continues to tariff Indian exports, India has been industriously establishing its footprint in Asia and diversifying trade.

Image source: The Indian Express

China is India’s second-biggest trade partner, and whatever fine-tuning toward easing tensions or deepening economic relations has the potential to carry over to industries, capital markets, and eventually into employment generation in finance. For students and professionals wishing to understand such macroeconomic moves, that’s where an investment banking course can provide useful insights. Such programs instruct you in analyzing international trade agreements, their effects on foreign direct investment (FDI), and how companies react to changes in global politics.

Background: U.S. Tariffs and India’s Response

The U.S. tariffs on Indian exports of certain items, namely steel, aluminum, and textiles, have been contentious since 2018, at their first instance of use. While there has been some relaxation, most industries still suffer. The effects have been direct (additional cost for exporters) and indirect (fluctuation in currency, loss of investors’ confidence).

India’s government has been proactively seeking alternative trade routes and partners to mitigate the effect. A stronger India-China collaboration could help stabilize trade flows, create more opportunities for manufacturing exports, and potentially reduce the dependency on Western markets.

If you’ve read our previous blog, Understanding the 25% Tariff Impact Through the Lens of Financial Modeling, you already know how financial modeling is used to estimate the effect of tariffs on profitability and revenue. This development offers another chance to use those models and see what could happen to investors and firms.

Investment Banking Perspective: Why This Matters

Investment bankers have a critical role in such international happenings. They determine which industry would be most helped by policy changes, help companies raise money to grow in expansion markets, and guide cross-border mergers and acquisitions (M&A).

Image source: The Secretariat

For example, if India and China come to an agreement regarding the reduction of tariffs on electronics components, we can anticipate FDI in Indian manufacturing to increase. Investment banks would then facilitate companies to mobilize funds for capacity addition and assist foreign investors to access the Indian market.

Investment banking training is one method of imparting to students and young professionals the ability to conduct sectoral analysis, company valuations susceptible to the kind of policy shocks, and pitch book preparation for prospective transactions. These are abilities that recruiters proactively seek.

Financial Modeling: A Practical Application

This is where financial modeling comes into play. By creating models assuming tariff cuts, currency exchange rate volatility, and probable demand growth, analysts can forecast future revenues and EBITDA for impacted sectors.

Assuming, for instance, that China commits to reducing tariffs on Indian pharma exports, it is possible to model the volume of incremental income received by Indian pharma firms from the increased export business using cost of production, exchange rates, and transportation rates.

This real-world use of finanial modeling is just what students receive when they take a course in financial modeling. It prepares them to apply their skill to actual data, interpret sensitivity analysis, and present actionable recommendations accepted by decision-makers.

Investment Banking’s Role in Trade Policy Impact Analysis

Investment banks play a pivotal role in helping governments, businesses, and investors understand the financial implications of international trade policies. When the U.S. imposed tariffs on India in the past, investment banks were among the first to release impact analyses on industries such as steel, aluminum, and textiles. Their research provided clarity on potential losses, job impacts, and price fluctuations.

For aspiring professionals, this is exactly where an investment banking course becomes valuable. Such a course equips students with the ability to dissect complex data, perform sector-wise analysis, and build reports that policymakers and corporations rely on. These skills allow future analysts to bridge the gap between political decisions and financial strategy.

A great real-world example was seen during the U.S.–China trade war, where investment banks prepared multiple risk scenarios for multinational companies to safeguard supply chains. Similar strategies are now being implemented as India prepares to negotiate new terms with both the U.S. and China in the face of evolving geopolitics.

Why Financial Modeling Is Crucial for Predicting Trade Outcomes

Financial modeling is at the heart of forecasting trade impacts. Analysts use DCF models, sensitivity analyses, and scenario planning to simulate potential outcomes under different tariff and regulatory conditions. For instance, a 5% tariff on raw materials might lead to cascading effects on production costs, consumer prices, and profit margins across industries.

Learning how to do this accurately is what makes a financial modeling course so valuable. It teaches students to build models that aren’t just theoretical but practical and actionable. You can read more about this in our previous blog on understanding the 25% tariff impact through the lens of financial modeling, where we explained step-by-step how to model the real-world consequences of tariff hikes.

Financial modeling doesn’t just stop at numbers, it also incorporates macroeconomic indicators like GDP growth, currency exchange fluctuations, and inflation trends. These models are often what CEOs and CFOs look at before deciding whether to absorb a tariff or pass it on to consumers.

Opportunities for Professionals in a Shifting Trade Landscape

As India strengthens its position in global trade, there’s a growing need for skilled professionals who can interpret these changes and provide data-backed recommendations. Whether it’s mergers and acquisitions (M&A) activity triggered by companies consolidating to face international competition or IPOs by firms benefiting from government incentives, investment bankers are at the center of the action.

For students and professionals looking to upskill, this is the right time to dive into an investment banking course that covers valuation techniques, M&A modeling, and deal structuring. These skills are increasingly in demand, as trade realignments often lead to consolidation and restructuring within industries.

Moreover, global banks like Goldman Sachs and Morgan Stanley have expanded their India research teams to focus on emerging opportunities resulting from these policy changes (source). This signals a surge in demand for professionals who understand both finance and geopolitics.

Conclusion: Why Now Is the Time to Upskill

India’s economic future is being shaped in real-time by global trade dynamics, geopolitical negotiations, and tariff shifts. The recent talks between PM Modi and Chinese leadership signal India’s proactive approach to balancing its trade relations, which will have ripple effects across multiple sectors.

If you’re a student, analyst, or finance enthusiast, this is your moment to build the skills that can make you a valuable player in this changing landscape. An investment banking course will prepare you to evaluate the financial and strategic implications of these shifts, while a financial modeling course will give you the tools to quantify them and present actionable insights.

With companies and governments placing greater emphasis on data-driven decision-making, professionals who can combine technical skills with geopolitical awareness will have an edge in the job market.

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