The Resurgence of Dealmaking Activity: How Tariff Policies Shift M&A Strategies

In recent years, the mergers and acquisitions (M&A) landscape has encountered profound shifts, particularly influenced by historic tariff policies enacted during the Trump administration. These policies significantly disrupted a thriving wave of dealmaking, particularly with regard to cross-border transactions involving China. However, recent developments signal a promising rebound in M&A activity, thanks to evolving trade policies and adaptive strategies being employed by businesses and private equity firms.

The Impact of Tariffs on M&A Activity

The tariffs imposed by the Trump administration, particularly those targeting Chinese imports, sent shockwaves through the M&A market. Tariff rates reached unprecedented levels, with some on Chinese goods soaring as high as 145%. This drastic escalation in tariffs created substantial uncertainty in cross-border transactions between the United States and China. Businesses hesitated to initiate new deals due to the unpredictable nature of these tariffs, leading to a widespread “wait-and-see” mentality.

During this period, many companies, particularly those in private equity, postponed or entirely shelved potential deals tied to the Asia-Pacific region. Concerns over the volatility in asset values due to fluctuating tariffs cautioned buyers and sellers alike. Moreover, the automotive sector was also adversely influenced, where the operational cost pressures from tariffs affected franchise valuations, impacting dealer profitability. Nevertheless, even amid these challenges, the auto dealership buy/sell market demonstrated resilience and innovation, driven primarily by industry consolidation and strategic responses from original equipment manufacturers (OEMs) source.

Recent Developments Indicating a Rebound

As 2025 rolls on, signs of recovery in dealmaking activity are becoming evident. The trade policy environment appears to be gradually clarifying, with ongoing negotiations and emerging preliminary trade agreements contributing to this renewed optimism. Private equity firms and corporations are increasingly adapting to the new landscape by bolstering due diligence practices. They are also integrating more favorable deal structures such as earnouts and contingent payments that respond dynamically to tariff changes.

The emergence of preliminary trade agreements in 2025—featuring reciprocal tariff rates that can adjust in accordance with compliance deadlines—signals a shift to a more flexible and negotiated tariff environment compared to the rigid structures of the past. This adaptation, particularly evident within the automotive industry, underscores how strategic consolidations and robust quarterly earnings are enabling sustained buy/sell activity, despite ongoing pressures from tariffs source.

A Forward-Looking Outlook on M&A Activity

While uncertainties regarding tariffs persist—particularly in the context of complex U.S.-China trade relations—companies and investors are increasingly prepared to proceed with deals. They do so with an enhanced focus on incorporating risk management strategies related to tariffs. The projected rebound in M&A activity is anticipated to gain momentum as trade policies continue to stabilize, steering the deal-making dynamic into a new era shaped by lessons learned from past tariff challenges.

The evolution in the M&A landscape also highlights the importance of resilience and adaptability in transaction structures. In sectors that remain sensitive to tariff fluctuations, such as automotive retail, the emphasis on strategic consolidations suggests that dealmaking is not merely returning to its previous form but is evolving with a renewed focus on flexibility and long-term sustainability source.

Conclusion

The tariff policies introduced during Trump’s presidency significantly disrupted the momentum of M&A activity, creating a landscape fraught with uncertainty. Yet, as the trade environment becomes more predictable and adaptive strategies flourish, the outlook for 2025 is optimistic. Enhanced due diligence, flexible terms, and industry-specific adjustments are paving the way for a resurgence in dealmaking, fostering a landscape characterized by resilience and forward-thinking strategies. The coming years are likely to reflect a reimagined M&A ecosystem, driven by agility and responsiveness in the face of global economic dynamics.