Dive Brief:
- Anxiety over the Trump administration’s recent tariff moves could slow the pace of merger and acquisition dealmaking in the months ahead, according to a report by Big Four firm Ernst & Young.
- Sudden tariff changes and unpredictability are causing dealmakers to proceed with caution, despite otherwise hopeful signs, EY said.
- “We came into 2025 very optimistic about the M&A market overall, and we're seeing dealmakers with strong pipelines ready to jump when the conditions are right, but volatility is pushing back some deal timelines,” Mitch Berlin, Americas vice chair of strategy and transactions at EY, said in an email.
Dive Insight:
President Donald Trump’s tariff-related actions since returning to the White House for a second term have stoked global economic fears, creating uncertainty for businesses.
On Tuesday, his administration followed through on a plan to impose 25% tariffs on imports from Canada and Mexico, while also raising duties on Chinese imports to 20%. The move rattled the stock market, with the S&P 500 erasing its gains since Trump’s reelection in November.
“The ‘Trump effect’ has introduced a layer of complexity to the M&A landscape, with policy changes influencing sector-specific deal flows,” EY said. The potential for disruption “remains high,” particularly in industries such as retail, automotive and technology, according to EY.
On Wednesday, the White House announced that Trump agreed to exempt automobiles from the new tariffs for a month at the request of the three largest U.S. automakers.
Amid the shifting policy landscape, many businesses are choosing to prioritize operational challenges over strategic growth moves like M&A, according to EY. “This focus on navigating the current landscape is likely to leave little room for the M&A market to rebound as quickly as expected,” the report said.
January saw a total of 132 large deals worth at least $100 million, a 21% year-over-year spike, EY said. The number of billion-dollar-plus deals rose 29% in January, compared with the year-earlier period.
While this represents a strong start for the year, “executives need more predictability around the impact of tariffs, regulation, corporate income tax rate and cost of capital on their business,” Berlin said.
