Corporate dealmakers around the world hit the brakes in April, driving merger and acquisition volumes to their lowest point since February 2005. The sharp slowdown follows U.S. President Donald Trump’s declaration of a “Liberation Day” trade offensive on April 2, when he announced across-the-board tariffs of at least 10 percent on all imports and steeper levies for key partners. The announcement roiled markets, unnerved finance chiefs and left buyers and sellers alike wary of moving ahead on transactions until the dust settles.

Tariff Shock Triggers Uncertainty

On April 2, Trump imposed a minimum 10 percent duty on $350 billion of goods from Europe, Japan and other allies, while threatening up to 145 percent tariffs on China. Although he immediately suspended enforcement for 90 days to allow for negotiations, the mere prospect of sweeping levies sent shockwaves through boardrooms and bank trading desks. Equity markets tumbled, borrowing costs for corporate deals ticked higher and volatility spiked to levels not seen since the height of the 2008 global financial crisis—creating a highly unfavorable backdrop for M&A.

Dealogic data show that just 555 deals were signed in the U.S. last month, the fewest in any single month since May 2009. Globally, 1,800 transactions were inked—down more than 50 percent from March and marking the weakest monthly figure in 20 years. Deal value fell to approximately $243 billion, roughly half the long-term average for April, and trailing well behind the early-year momentum that had pointed to a record-breaking 2025.

Across the major investment banks, relationship managers report a deluge of client inquiries as corporate leaders scramble to reassess acquisition plans. “We’re advising clients to sit tight until they fully understand the implications of potential tariffs,” said a senior M&A banker at a Wall Street bulge-bracket firm. “Nobody wants to sign a deal that could be upended by a sudden imposition of tariffs or retaliatory measures.”

CFO surveys conducted by consulting firms in late April indicate that nearly two-thirds of North American and European companies have suspended formal deal talks or are postponing planned acquisitions. Liquidity remains abundant—cash on corporate balance sheets reached an all-time high of $4.5 trillion last quarter—but appetite for deploying that cash has waned amid policy whiplash.

Comparisons to Past Downturns

Analysts note that April’s figures eclipse M&A troughs seen during the darkest days of the COVID-19 pandemic in 2020 and the global financial meltdown of 2008–2009. In spring 2020, lockdowns and economic uncertainty pushed global deal count below 2,000 for the first time in a decade; the Beltway’s tariff salvo has now replicated a similar chill in dealmaking, even as underlying economic growth remains sturdier.

“Unlike past shocks, this slump is driven primarily by policy unpredictability rather than economic contraction,” said Kristin Pothier, global head of deal advisory at a major professional services firm. “When CEOs can’t predict input costs or market access, they’re far less inclined to commit to big-ticket deals.”

The trade offensive has coincided with other sources of uncertainty. Trump’s repeated threats to fire Federal Reserve Chairman Jerome Powell earlier this year shook confidence in the central bank’s independence, sending Treasury yields on a roller-coaster ride. Rising U.S. interest rates, aimed at taming inflation, have lifted borrowing costs across corporate credit markets—making leveraged buyouts and shareholder-friendly recapitalizations more expensive to structure.

Additionally, U.S.–China diplomatic tensions have flared anew, with Beijing threatening retaliatory tariffs on American agricultural and industrial exports. That retaliation could further disrupt global supply chains and chip away at earnings forecasts, complicating valuation models that underpin M&A negotiations.

Sector-Specific Impacts

Not all industries have been hit equally. Technology deals—where value lies predominantly in software, algorithms and digital intellectual property—have shown relative resilience. Tech M&A accounted for nearly 40 percent of U.S. deal value year-to-date heading into May, buoyed by acquisitions of cloud-computing firms, cybersecurity vendors and data-analytics platforms that face little direct threat from goods-based tariffs.

By contrast, sectors heavily dependent on cross-border manufacturing—such as automotive, industrials and consumer goods—have experienced the steepest drop-off in deal activity. Companies that import components or export finished products are grappling with price swings and margin compression, prompting acquirers to reassess supply-chain risk before proceeding with takeovers.

A Few Big Deals Provide Temporary Relief

Even amid the broad malaise, several marquee transactions closed in April. Global Payments’ $24.3 billion acquisition of a leading payments processor gave volumes a fleeting lift, as did the sale of a flight-software business by a major aerospace firm for $10.6 billion. Yet these outliers could not compensate for the hundreds of mid-market and private-equity deals that were shelved last month.

Private equity executives report a slowdown in auction processes, with several sponsors postponing follow-on fundraises until there is more clarity on tariff and interest-rate trajectories. Dry powder—uninvested capital held by buyout firms—remains at record levels, but sponsors say they are wary of locking in valuations that might later look rich if economic headwinds persist.

Looking ahead, M&A bankers are watching June 30, the next key review date for the tariff moratorium, as the next inflection point. Should the administration extend or roll back duties, dealflow could rebound swiftly; a full enforcement of planned tariffs, however, risks deepening the slump into the second half of the year.

Internationally, Europe and Asia have fared slightly better, thanks in part to lower direct exposure to U.S. tariffs. Cross-border transactions involving European and Asian counterparties slipped by a more modest 30 percent in April, according to regional deal trackers. Nonetheless, global strategic acquirers are delaying capex commitments and large-scale consolidations until the broader trade and monetary policy picture clears.

Dealmakers Adapt Strategies

In response to the slowdown, some dealmakers are pivoting toward alternative strategies. Joint ventures, minority equity investments and structured collaborations—such as licensing partnerships—are gaining favor as lower-commitment routes to growth. By opting for “optionality” structures, companies can secure strategic footholds without fully absorbing target liabilities or supply-chain complexities.

Advisors also foresee an uptick in distressed mergers, particularly in sectors facing prolonged tariff exposure or credit-cost pressures. Companies unable to refinance existing debt on favorable terms may become acquisition targets, kicking off a wave of rescue-style deals later in the year.

Beyond tariffs, M&A participants are monitoring potential changes to antitrust enforcement and national security reviews. Both the U.S. Committee on Foreign Investment in the United States (CFIUS) and the European Commission have signaled tougher scrutiny of overseas bidders in sensitive industries. Heightened geopolitical scrutiny, especially for deals involving critical infrastructure or emerging technologies, may further slow approval timelines.\

April’s precipitous drop in M&A activity underscores a turning point: after years of unprecedented dealmaking fueled by low rates and eager corporates chasing scale, businesses now face a complex calculus. Tariff shocks, central-bank uncertainty and political crosscurrents have collided, prompting a collective pause in the global hunt for acquisitions.

For dealmakers, the challenge is to navigate this policy-driven turbulence while preparing for the next wave of consolidation. Whether M&A rebounds sharply once tariff clouds clear—or whether a more guarded, staged approach becomes the norm—will depend on how quickly markets regain confidence in predictable trade and monetary regimes.

(Adapted from GlobalBankingAndFinance.com)    

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy