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With 2025 just past the halfway point, federal government tariffs and how much they’ve impacted mergers and acquisitions is still an evolving question for M&A attorneys.
The impact often depends on what industry is involved in a potential deal and its exposure to tariffs.
Some M&A attorneys aren’t seeing a slowdown in deal volume, even if tariffs have added to due diligence considerations surrounding deals.
Caruso said there were some deals frozen in the first quarter as buyers tried to assess potential tariff impacts.
However, he noted that the reticence of some buyers and sellers has waned as the year has gone on.
“I think people have adapted and overcome and they have to make money,” Caruso said.
A Bain & Company 2025 M&A Midyear Report noted that there is evidence that some companies are not allowing tariffs to derail M&A activity.
“One sign is that while deal value and volume dropped when the tariff era began in April, deal value bounced back in May,” according to the report.
A PwC midyear report on global M&A industry trends reported seeing transactions in companies with a local focus within national borders, as well as in service companies or others less susceptible to tariffs.
The PwC report stated “great companies with strong cash flow and healthy prospects in any territory or sector are still being bought and sold.”
But, according to the report, the market has not been kind to the many companies falling outside these parameters.
“In the US, for example, a PwC Pulse Survey from May 2025 showed that, in response to the tariff uncertainty, 30% of companies had paused or revisited deals. We expect dealmakers to feel the continued fallout over the coming months,” the report stated.
Josh Hollingsworth, a partner in Barnes & Thornburg’s Indianapolis office, said he thought the first half of 2025 had been “fairly choppy” when it came to M&A activity.
“I think the common expectation was that it would be a busy time,” Hollingsworth said.
The biggest headwind he’s seen for M&A involves tariffs.
Hollingsworth said business owners need certainty for the long-term planning associated with mergers and acquisitions.
That’s been taken away by the unpredictability of the tariffs and ever-changing rates, Hollingsworth said.
“Every day it’s a different number for a different country,” Hollingsworth said.
He said industries with the largest exposure to tariffs are seeing the sharpest decline in M&A activity. Those would include retail, automotive and pharmaceuticals.
Industries without that exposure are still quite active with deals, Hollingsworth said, listing business services, HVAC, plumbing and landscaping as a few that quite busy in the M&A environment.
Brittney Yocum, a Faegre Drinker Biddle & Reath LLP partner, said any industry sector reliant on the global supply chain has been impacted by tariffs.
But Yocum stressed that she had not seen a decrease in overall M&A deal volume since the Trump Administration first announced the imposition of tariffs.
She said tariffs have resulted in buyers using increased due diligence when they are looking at acquiring targets with tariff exposure.
Yocum said attorneys are taking longer in drafting representations and warranties in purchase agreements, with a closer look required in how tariffs could potentially impact a buyer or the valuation of a target who has seen costs go up and/or sales decline.
Some industries as busy as ever
Jason Lueking, an attorney in Stoll Keenon Ogden’s Indianapolis office, said his firm had been busy the first half of the year with M&A deals involving the automotive industry.
Lueking acknowledged there had been uncertainty for some buyers and sellers about tariffs and their potential impacts on automotive services and new and used car prices.
“So far, we haven’t seen the impact,” Lueking said.
A report released earlier this month by Cox Automotive said evidence of significantly higher prices on new vehicles driven by tariffs hadn’t materialized.
“Automakers continue to hold their fire on raising the manufacturer’s suggested retail prices (MSRPs) significantly as demand remains tepid and policy has yet to be solidified,” the report stated.
Cox reported the average new-vehicle listing price at the end of June remained essentially flat month over month, down by only $84 to $48,749. Compared to last year, average listing prices were 3.1% higher. Nearly every automaker’s average listing price swung less than 2% higher or lower than the previous month.
Lueking said a lot of auto dealer clients feel good about the tax cuts in President Donald Trump’s “Big Beautiful Bill” as they relate to business succession planning.
He said he is optimistic his office will remain busy with deals for the remainder of the year.
What about the rest of 2025?
Opinions vary among M&A attorneys about how the rest of the year will shake out.
Hollingsworth said he doesn’t see M&A activity coming back in a big way this year unless there’s more certainty on tariffs.
Yocum said deal activity involving service industries is still strong and she expects the second half of 2025 to be stronger overall.
She said a clearer direction in U.S. trade policy will help M&A activity and deal volume moving forward.
The Faegre Drinker partner said there is always some market turmoil with a new presidential administration.
“I do think it happens any time there’s a change in administrations, but I think it’s amplified this time around,” Yocum said.
Bain & Company’s mid-year report acknowledged that deal makers face increasing pressure to allocate capital to generative artificial intelligence and other newly critical capabilities—possibly at the expense of investments in M&A.
The report added that interest rates are likely to remain relatively high in the U.S. amid inflationary pressures, even as the European Central Bank continues with its steady progress of rate cuts.
Caruso said professional services had been active, in terms of M&A activity, with private equity showing more interest in deals involving engineering firms and doctor and dental practices.
Overall, the Taft attorney expects a robust third and fourth quarter for M&A this year.
Outside of tariffs, Caruso said buyers and sellers are still keeping an eye on inflation and the outside possibility of a recession as they enter the latter half of 2025.•
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