By John Legrand, Deputy Group CEO and Regional CEO, UK, Ireland and Crown Dependencies
It’s often the case where nothing significant appears to happen for decades, and then there is 2025 where it already feels like decades have happened and it’s only April.
We’ve lived in an era where globalisation and free trade have fuelled a global economic boom. However, the advent of Donald Trump 2.0 has clearly shown a shift in this way of thinking. And it’s not just a U.S. phenomenon; if you look at global geopolitics, we’re seeing multiple European countries embrace stronger national economic policies.
A new chapter for international trade
President Trump has enacted several significant trade policies, including the America First Trade Policy and the Fair and Reciprocal Plan. The Fair and Reciprocal Plan aims to impose reciprocal tariffs on countries that enforce higher duties on U.S. goods. In his liberation speech, he announced tariffs ranging from 10% to 50% on nearly all trading partners.
While Trump has subsequently announced, on 9 April, that he will pause most reciprocal tariffs for 90 days, this shift in U.S. trading policy may yet have profound implications for global trade and for many industries and sectors, including the private markets.
Strategic considerations for private markets players
A new report published by PwC suggests that to mitigate the impact of these tariffs, equity-focused private equity (PE) firms could support their portfolio companies in implementing strategies such as diversifying supply chains, reassessing sourcing locations, and exploring tariff engineering as well as dynamic pricing models to reduce costs and stay competitive. Additionally, they can leverage trade programmes such as free trade agreements and duty drawback programmes to manage or defer tariff expenses.
Meanwhile, investment-focused PE firms should monitor market conditions and consider adjusting investment strategies accordingly, focusing on sectors less affected by tariffs. They also can evaluate opportunities in domestic markets.
This is certainly a time of change and readjustment. Companies and investors will need to remain agile and innovative in their decision-making, ensuring a sharp understanding of policy shifts and an ability to respond swiftly to changes in regulations, trade relationships and political landscapes.
Changing geopolitical dynamics and opportunities
Tariffs are just one element of the current macroeconomic environment. We’re also living amid multi-faceted geopolitical instability, with conflicts such as Russia-Ukraine, tensions in the Middle East, and the China-Taiwan situation.
These geopolitical dynamics will undoubtedly impact PE firms, but they also bring certain opportunities. According to recent research by Bain & Company, the role of private capital in defence has significantly increased over the past 15 years. This growth is driven by the need for innovation, expanded capacity, and improved affordability in the sector. From cybersecurity to advanced manufacturing and logistics, PE firms can invest in companies that provide cutting-edge technologies and services to defence agencies while also contributing to the advancement of the wider economy and infrastructure.
Looking more broadly, it’s notable that BlackRock recently agreed to buy a Hong Kong firm’s stake in the Panama Canal ports amid pressure from President Trump. However, Chinese antitrust regulators are investigating this deal, reportedly delaying its closing. This situation raises important questions about the role of private markets in geopolitics.
IQ-EQ Crossroads ‘25: Examining the impact on private markets
All of the above reflects the theme of this year’s IQ-EQ Crossroads conference, our flagship annual industry event that focuses on major global issues impacting the private markets investment community. Given everything going on in the world at present, geopolitics emerged as the clear choice for 2025.
Private market firms have always been adept at navigating complex and changing environments, evolving in the face of challenging circumstances – and there’s no reason to believe this time will be any different. The current geopolitical and economic landscape presents both challenges and opportunities for private markets players, and on 7 May 2025 we’ll be joined by a variety of industry experts and special guests to discuss it all in more detail. I, for one, am looking forward to what promises to be an exceptionally dynamic and insightful session.
To find out more about our plans for IQ-EQ Crossroads 2025, please click here.
