The global landscape of mergers and acquisitions (M&A) witnesses a significant downturn, reaching its lowest point in two decades. This decline is more pronounced than during major economic disruptions like the 2008 financial crisis. Influenced by geopolitical tensions and economic uncertainty, companies are increasingly hesitant to engage in deals. Notably, the imposition of tariffs under the Trump administration has significantly contributed to this trend, highlighting the fragile nature of current economic conditions and business sentiment.
Previously, M&A activities have shown resilience even during turbulent times. For example, during the 2008 recession and the initial COVID-19 pandemic wave, although there was a decline, it was not as steep as seen now. Historically, major economies like the U.S. maintained a steady flow of deals even when faced with global challenges, underscoring a stark contrast with present dynamics where even robust markets hesitate. The current scenario accentuates the exacerbated level of uncertainty gripping global businesses due to geopolitical moves like tariff implementations.
What Factors Are Fueling the Decline?
A key factor in this decline is the global trade war instigated by the U.S. under President Trump’s administration. Imposing tariffs on numerous countries, including key partners like the EU and China, resulted in high levies and created economic ripple effects. The ramifications of these measures have led to a reduction in M&A contracts, evidenced by the drop to 2,330 deals in April 2025, marking the least since February 2005. In particular, the U.S. witnessed only 555 deals, indicating hesitance among corporations amid volatile conditions.
How Are Companies Responding to Tariff Challenges?
The imposed tariffs have not only affected immediate deal-making activities but have also instilled a sense of caution among global businesses. Companies like Klarna have halted their public listing plans, reflecting the pervasive uncertainty. Furthermore, sectors like retail are experiencing heightened concerns over supply chain disruptions, as highlighted in the PYMNTS Intelligence report. These factors collectively contribute to the constrained business ecosystem currently observed.
“Mid-sized companies widely expect supply chain disruptions and rising costs, and those fears increasingly appear justified,” stated a recent industry report. “Major U.S. ports are sounding alarms about precipitous drops in import volumes, and executives from companies like Walmart, Target, and Home Depot have expressed concerns over potential product shortages and increasing prices.”
Despite these challenges, some companies like Global Payments continue to navigate through and secure deals, evidenced by its acquisition of Worldpay and strategic divestitures. These actions underline the different strategies adopted by businesses amidst uncertainty, weighing risks against potential growth opportunities.
Given the complexity of the current environment, the global business community remains watchful, anticipating developments like the Federal Reserve’s policy stance, which could influence future economic outlooks. Overall, the impact of tariffs on M&A activities demonstrates the interconnectedness of geopolitics and business operations, indicating that while some companies may maneuver through, many choose prudence amid the uncertainties facing international trade.
