Mutual Fund Inflows Hit in March: Are Trump’s Tariffs to Blame?

Summary of March 2025 Mutual Fund Flows

According to recent data from multiple sources, mutual fund inflows experienced a significant decline in March 2025, with evidence suggesting that President Trump’s tariff announcements played a substantial role in this shift.

Equity mutual funds saw inflows drop by 14% in March 2025, decreasing from Rs 29,303 crore in February to Rs 25,082 crore Economic Times. The overall mutual fund industry recorded a massive outflow of Rs 1.64 lakh crore in March, compared to an inflow of Rs 40,076 crore in February.

In the U.S. market specifically, long-term mutual funds experienced substantial outflows in early April, with total estimated outflows of $24.63 billion for the week ended April 2, according to the Investment Company Institute (ICI) ICI.

Trump’s Tariff Announcements

The timing of the fund outflows coincides directly with President Trump’s significant tariff announcements:

• On April 2, 2025, President Trump announced sweeping tariffs of at least 10% on most goods coming into the U.S. through an executive order titled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices” White House.
• This baseline 10% tariff was set to take effect on April 5, 2025, at 12:01 a.m. EDT, impacting nearly all trading partners.
• On April 9, 2025, President Trump announced a 90-day pause on these tariffs for many countries but significantly increased tariffs on China to 125% CNN.
• China retaliated by raising its own tariffs on U.S. goods to 125%, escalating the trade war further Yahoo Finance.

The Connection Between Tariffs and Fund Outflows

Multiple sources have explicitly linked the decline in mutual fund inflows to concerns over Trump’s tariffs:

1. Direct Attribution: The Economic Times clearly stated that “Mutual fund net inflows experienced a decline in March due to investor concerns regarding Trump tariffs” Economic Times.
2. Timing of Outflows: The largest outflows were recorded immediately following Trump’s tariff announcements. According to Reuters, U.S. equity funds saw the largest net outflows in three months during the week through March 19 due to “worries about the impact of U.S. tariff concerns” Reuters.
3. Accelerated Outflows: Bond funds experienced particularly severe impacts, with investors withdrawing a net $15.64 billion from U.S. bond funds during the week ending April 9, 2025—the largest amount for a week since December 21, 2022 Reuters.
4. Sectoral Impact: The impact varied significantly across fund categories. Sectoral and thematic funds saw a massive decline in inflows by around 97%, dropping from Rs 5,711 crore in February to only Rs 170 crore in March Economic Times. In the U.S., the financial sector was particularly hard hit, with a $2.05 billion withdrawal—the biggest weekly outflow since April 2022 Reuters.

Market Reaction to Tariff Announcements

The broader stock market’s reaction to the tariff announcements provides additional context for understanding the mutual fund outflows:

• The S&P 500 plummeted following Trump’s initial tariff announcement but surged 9.5% on April 9 after he announced the tariff pause—marking its third-best day since 1940 CBS News.
• However, the market tumbled again on April 10 when the White House clarified the plan for a 145% tariff on China, wiping out much of the previous day’s gains CNN.
• The volatility in equity markets directly impacted mutual fund flows, as investors sought safer options amid the uncertainty.

Other Contributing Factors

While Trump’s tariffs appear to be a significant factor in the March mutual fund outflows, other elements likely contributed as well:

1. Recession Fears: The bond fund selloff was also attributed to fears of a recession, with the tariff situation exacerbating these concerns Reuters.
2. Inflation Concerns: Worries that the escalating U.S.-China trade war could fuel inflation contributed to investors pulling money from bond funds Reuters.
3. Seasonal Factors: In some regions, such as India, the end of the fiscal year in March traditionally sees some outflows as corporations withdraw funds for tax payments and other compliance requirements CNBCTV18.

U.S. vs. Global Impact

The impact of Trump’s tariffs appears to have been global, affecting fund flows in both U.S. and international markets:

• International mutual funds dropped up to 11% in a week following Trump’s tariff announcements Economic Times.
• In India, mutual fund inflows declined by 14% in March 2025, with the overall mutual fund industry experiencing an outflow of Rs 1.64 lakh crore India Today.
• U.S. pension funds were severely impacted as well, with the top 25 state and local U.S. pension investment funds suffering an estimated paper loss of $169 billion in public equities after the tariff announcement Bloomberg.

Conclusion: Were Trump’s Tariffs to Blame?

Based on the available evidence, Trump’s tariff announcements appear to have been a significant—though not exclusive—factor in the March 2025 decline in mutual fund inflows. The timing of the outflows, explicit attribution in financial reporting, and the scale of market volatility following the tariff announcements all support this conclusion.

The mutual fund industry’s response reflects broader investor concerns about how these tariffs might impact global economic growth, corporate profitability, and inflation. As the trade situation continues to evolve, fund flows will likely remain sensitive to further developments in trade policy and the ongoing U.S.-China trade tensions.

What makes this particularly notable is the scale of the response: the largest weekly bond fund outflows in over two years and the dramatic 97% drop in sectoral fund inflows suggest that investors are taking the potential impact of these tariffs very seriously. While other economic concerns are certainly at play, the tariff announcements appear to have been the primary catalyst for this significant shift in investor behavior during March 2025.