Blackstone Urges Swift End to Tariff Turmoil as Deal Exits Slow

The global private equity giant Blackstone Group has emerged as a vocal advocate for resolving trade tensions, warning that prolonged tariff volatility risks derailing its 2025 exit strategy. With $3 trillion in unsold assets weighing on the industry, Blackstone’s leadership is urging policymakers to address uncertainties that have slowed mergers and acquisitions (M&A) and depressed exit valuations.

Blackstone’s concerns are underscored by its own struggles. Recent data shows that private equity-backed exits in the first quarter of 2025 fell 33% from 2021’s peak, with Blackstone’s projected proceeds dropping by nearly 20% since April. Analysts now estimate its 2025 exit proceeds could fall to as low as $800 million—half the 2021 level.

The Tariff Trap

The U.S.-China trade war and recent tariff escalations under President Donald Trump’s administration have created a perfect storm for dealmakers. Blackstone’s President Jon Gray has explicitly warned that unresolved tariff disputes could trigger a “domino effect” of financial instability, citing risks like counterparty failures and rising leverage-driven defaults.

Supply chain disruptions are compounding the problem. Portfolio companies, particularly those in manufacturing or global logistics, face inflated costs and delayed sales. For instance, Blackstone’s infrastructure assets—like data centers—are increasingly exposed to tariff-driven inflation, squeezing profit margins.

Blackstone’s Playbook: Aggressive Deals, Caution on Policy

Despite the challenges, Blackstone remains active. Its $8 billion acquisition of Jersey Mike’s Subs in late 2023 and $16 billion purchase of Australian data center operator AirTrunk highlight its strategy to capitalize on falling interest rates and undervalued assets.

Yet Martin Brand, Head of North America Private Equity, acknowledges the limits of this approach. “It’s too early to assess the impact of tariffs and regulatory shifts under the incoming administration,” he stated. While Blackstone bets on a rebound in IPO markets and cheaper capital costs, its success hinges on policy clarity.

The Bigger Picture: Liquidity Crunch and Industry-Wide Risks

The tariff fallout extends beyond Blackstone. Limited partners (LPs), including pensions and sovereign wealth funds, are reeling from the “denominator effect”—a phenomenon where falling public market values force them to reduce allocations to illiquid assets like private equity. This threatens Blackstone’s fundraising pipeline, as LPs face pressure to rebalance portfolios.

Secondary market sales, a critical exit channel, are also faltering. Prices for fund stakes now trade below 90% of face value, reflecting investor skepticism. Meanwhile, rising high-yield credit spreads (now over 4%) and weak liquidity at 14% of rated speculative-grade firms amplify default risks—a direct hit to Blackstone’s leveraged holdings.

Conclusion: Time is Running Out for Policy Resolve

Blackstone’s warnings underscore a critical truth: the private equity industry’s health is inextricably tied to trade policy stability. With exit volumes slumping and valuations under pressure, the firm’s ability to realize returns hinges on swift resolution of tariff disputes.

The data is stark:
- $3 trillion in unsold assets linger as buyers and sellers clash over valuations.
- 33% drop in peak exit volumes since 2021.
- 20% downward revisions to Blackstone’s 2025 exit forecasts.

Blackstone’s aggressive dealmaking and focus on AI-driven sectors offer hope, but without policy clarity, its 2025 exit surge may remain out of reach. As Jon Gray put it, “The market needs certainty—not more volatility.” For now, the ball is in policymakers’ court.