Potential impact of U.S. tariffs on M&A activity in early 2025: KPMG report

A recent report from KPMG has highlighted concerns regarding potential slowdowns in merger and acquisition (M&A) activity in the first half of 2025. The report draws attention to proposed tariffs by the United States on Canadian goods as a key factor that could contribute to this deceleration.

The imposition of tariffs between countries can have far-reaching implications on the business landscape, impacting trade relations, market dynamics, and investor sentiment. In the context of M&A activity, uncertainties surrounding tariffs can introduce a level of risk and complexity that may deter companies from engaging in strategic acquisitions or mergers.

One significant consequence of these proposed tariffs is the potential disruption they could cause to cross-border transactions. The introduction of tariffs can increase costs for businesses involved in M&A deals, affecting the overall financial viability of such transactions. Companies may need to reassess their investment strategies and risk profiles in light of these additional financial burdens.

Moreover, the uncertainty created by the imposition of tariffs can lead to delays in deal-making processes. Companies may adopt a cautious approach and postpone M&A decisions until there is more clarity on the tariff situation. This hesitation can further contribute to a slowdown in M&A activity, restricting the flow of capital and hindering corporate growth and expansion.

The report underscores the importance of monitoring geopolitical developments and trade policies when considering M&A opportunities. Businesses operating in global markets must stay informed about regulatory changes and tariff implementations that could impact their strategic decisions. The ability to adapt to changing economic conditions and navigate geopolitical challenges is crucial for sustaining growth and competitiveness in the M&A landscape.

In light of the potential ramifications of proposed tariffs on M&A activity, companies should conduct thorough assessments of the risks and opportunities associated with cross-border transactions. This assessment should include a comprehensive analysis of the financial implications of tariffs, as well as an evaluation of the geopolitical factors that could affect the success of M&A deals.

By staying informed, evaluating risks, and adopting a strategic approach to M&A decision-making, businesses can mitigate the impact of external factors such as tariffs on their growth and expansion plans. While uncertainties in trade policies may pose challenges, proactive planning and careful consideration of market dynamics can help companies navigate the complex landscape of cross-border M&A transactions.