Tariffs, Interest Rates and Policy Shifts Curb Wall Street’s 2025 M&A Revival

Wall Street entered 2025 anticipating a broad resurgence in U.S. mergers and acquisitions after Donald Trump returned to the White House. A year later, the anticipated boom has been replaced by a patchwork of record-sized transactions, uneven sector activity and lingering caution tied to tariffs and borrowing costs.

Mismatched Expectations

Through Dec. 15, U.S. companies announced or completed roughly 13,900 deals, down from 15,940 during the same period in 2024, according to PitchBook. Despite the decline in volume, total deal value climbed to about $2.4 trillion from $1.83 trillion a year earlier, lifted by several headline transactions. Union Pacific’s proposed $85 billion purchase of Norfolk Southern, Netflix’s $72 billion bid for Warner Bros. Discovery’s streaming and studio assets, and the roughly $50 billion plan to take Electronic Arts private accounted for a sizable share of the increase.

Middle-market activity, however, remained subdued. An S&P Global review of announced transactions through November found that the jump in overall deal value was largely a function of megadeals, while transactions below that tier contracted.

Tariffs Disrupt Early Momentum

Much of the slowdown took root in the first half of the year after the White House unveiled “reciprocal tariffs” on more than 180 countries in April. The unexpected policy, branded “liberation day” by the administration, clouded earnings forecasts and complicated cross-border deal modeling. References to “macroeconomic uncertainty” proliferated in earnings calls as executives delayed decisions on potential acquisitions, especially in consumer-facing industries that were unsure how far higher import costs could be passed to shoppers.

Retail and consumer companies recorded 227 U.S. deals through mid-December, down from 296 during the same stretch in 2024, PitchBook data show. The aggregate value of those transactions nonetheless rose to more than $40 billion from roughly $28.4 billion, underscoring the broader trend of fewer but larger agreements.

Interest Rates and AI Spending Weigh on Calculations

The Federal Reserve cut rates three times in 2025, yet its benchmark remains well above pre-pandemic levels, raising financing costs for highly leveraged buyouts. Persistent rate pressure, combined with elevated spending on artificial intelligence initiatives, constrained balance-sheet flexibility for many would-be acquirers. The central bank signaled a cautious stance on further reductions at its most recent meeting, a position outlined in its official statement available on the Fed’s website.

Sector-Specific Outcomes

Industrials and Energy: Deal value grew in industrials, energy and health care as companies pursued scale and supply-chain resilience. Global industrial manufacturing registered more than 8,800 transactions worth $303.7 billion in 2024, a 3.1% increase, but activity tailed off late that year and remained soft in early 2025.

Automotive: Expectations of supplier consolidation cooled after the expiration of federal tax credits for electric vehicles prompted several automakers to rethink EV strategies. Ford Motor, for example, recorded a $19.5 billion write-down linked to revised electric-vehicle plans. Automotive deal volume fell 19.9% year over year through the third quarter, according to KPMG.

Imagem: financial planning 53

Media: Consolidation efforts faced uncertain regulatory timing. Nexstar Media Group’s $6.2 billion agreement to acquire Tegna is still awaiting Federal Communications Commission rule changes. Verizon discontinued diversity, equity and inclusion policies before securing FCC clearance for its $20 billion purchase of Frontier Communications. Paramount Skydance closed its merger after paying $16 million to settle litigation with President Trump and pledging to avoid DEI programs. The company has since launched a hostile bid for Warner Bros. Discovery, contending that its chances of approval surpass those of Netflix’s competing offer.

Life Sciences: Large pharmaceutical firms intensified middle-market acquisitions toward year-end to replenish pipelines ahead of patent expirations. Pfizer agreed to pay up to $6 billion for rights to a cancer therapy from China-based 3SBio and outbid Novo Nordisk for obesity-drug developer Metsera.

Banking Consolidation Accelerates

The financial sector showed the clearest turn in momentum. Announced bank deals rose 88% in the second half of 2025, and aggregate transaction value nearly quadrupled to $39 billion, according to S&P Global Market Intelligence. Activist pressure contributed: hedge fund HoldCo targeted lenders with more than $200 billion in combined assets, culminating in Comerica’s $10.9 billion agreement to merge with Fifth Third, the year’s largest bank combination.

Advisers report that regulatory reviews are moving faster than in the prior administration, with some approvals arriving in roughly half the previous time. Bankers say the favorable window could persist for another 12 to 24 months, encouraging speculation about potential large-bank mergers aimed at filling product gaps or strengthening deposit bases.

Looking Ahead

While 2025 will finish well below the record-setting pace of 2021—when 19,666 U.S. transactions valued at $5.55 trillion were logged—activity in the second half of the year suggests a firmer footing heading into 2026. Executives cite clearer tariff cost estimates, steady AI investment tailwinds and an expectation of incremental rate relief as factors that could support a broader revival in deal flow.

Crédito da imagem: LightRocket via Getty Images