As President Donald Trump doubles down on an aggressive tariff agenda in 2025, a growing sense of unease is spreading across the M&A landscape.
This time, the concern isn't just about geopolitics or trade imbalances—it's about how rapidly shifting regulatory frameworks are reshaping the financial and legal calculus of mergers, acquisitions, and private equity investments.
At the center of this upheaval is a renewed push to implement wide-ranging tariffs under both the International Emergency Economic Powers Act (IEEPA) and Section 232 of the Trade Expansion Act.
These tools have enabled the administration to enact tariffs on nearly all imported goods, targeting virtually every major U.S. trading partner—China, Mexico, Canada, and the European Union among them.
A Tidal Wave of Tariffs
The scope of the tariffs is staggering:
- IEEPA-based tariffs now affect nearly all product categories, with particular strain on industries with global supply chains—automotive, aerospace, energy, electronics, pharma, machinery, and consumer goods.
- Section 232 tariffs have expanded beyond raw materials to include "derivative" goods like kitchenware, furniture, and even sporting equipment.
- Additional investigations into imports such as semiconductors, timber, and copper signal that further tariffs are likely, especially in politically sensitive industries.
These developments don't just create short-term turbulence—they introduce deep structural uncertainty into the valuation and viability of corporate assets, especially those reliant on global production networks.
The M&A Fallout: Valuation, Liability, and Strategic Disruption
For acquirers and investors, this tariff regime presents unprecedented risk. The key challenges include:
1. Disrupted Valuation Models
Traditional valuation metrics are under strain. A company's profit margins and supply chain resilience can be dramatically altered by newly imposed duties, especially if their goods fall under aggressive tariff categories.
2. Successor Liability Concerns
Buyers in both stock and asset deals now face potential exposure to legacy customs violations. Under U.S. law, successor companies can be held responsible for up to five years of backdated customs liabilities, including penalties for misclassified or undervalued imports.
3. Due Diligence Complexity
Standard diligence is no longer sufficient. Deal teams must now:
- Review Harmonized Tariff Schedule (HTS) codes to determine if goods are subject to existing or future tariffs.
- Conduct rule-of-origin analyses to validate any supply chain shifts and assess their legitimacy under customs law.
- Audit for high-risk imports, such as goods previously exempt under temporary tariff exclusions.
- Investigate any ongoing CBP inquiries, which could expose the target company to legal or financial liabilities post-closing.
A well-rounded due diligence can provide critical insights into how tariffs might affect transaction success and influence brand positioning strategies post-acquisition.
4. Strategic Mitigation is Now a Selling Point
Target companies can improve their positioning by taking proactive steps, including:
- Obtaining binding rulings from U.S. Customs to clarify tariff obligations.
- Structuring operations to qualify for Chapter 98 HTS exemptions or regional trade agreement protections.
- Renegotiating supplier agreements to share or shift tariff burdens.
- Analyze customer contracts, assess the robustness of the target's customer base, and gauge their ability to absorb additional costs or reprice products effectively.
Sellers that can demonstrate these mitigations may command better valuations and shorten deal timelines.
A New Era of Transactional Caution
The result is a more cautious and granular approach to deal-making. Legal teams are embedding tariff-related clauses into agreements, finance teams are adjusting forecasts to include variable duty rates, and investors are rethinking risk-reward ratios in industries where supply chains are vulnerable.
M&A in 2025 is no longer just about identifying synergies—it's about predicting regulatory headwinds and building resilience into the deal structure.
After completing an M&A transaction, your focus should shift to optimizing tariff exposure through supply chain synergies.
By integrating and re-evaluating global operating models, you can transform tariff challenges into strategic advantages, ultimately supporting the realization of long-term synergy benefits.