Geopolitical Tensions and Capital Shifts Drive US Dealmaking Downturn

US dealmaking experienced a significant downturn in 2025, with the first quarter marking the worst start to a year in a decade. This decline can be attributed to several factors, including geopolitical tensions and shifts in corporate strategies.

In response to the US-China trade dispute, China imposed retaliatory tariffs on approximately $14 billion worth of US goods. This escalation in trade tensions has likely contributed to the slowdown in US dealmaking, as companies may be hesitant to engage in cross-border transactions due to increased uncertainty and potential risks.

Meanwhile, French President Emmanuel Macron announced a €109 billion investment in artificial intelligence (AI) in France over the coming years. This significant investment in AI technology may have drawn capital away from other sectors, potentially impacting dealmaking activity in the US.

Additionally, the growing trend of companies, such as software giant MicroStrategy, adopting bitcoin as a corporate treasury asset has gained traction. This shift in corporate strategy may have led some companies to allocate resources towards cryptocurrency investments instead of traditional mergers and acquisitions (M&A) activities.

The combination of geopolitical tensions, strategic shifts in capital allocation, and other factors has contributed to the decline in US dealmaking in 2025. As the situation evolves, it will be crucial for businesses to adapt their strategies and navigate the changing landscape to succeed in the current environment.