Family Office Deal-Making in a Geopolitical Crossroads: Navigating Tariffs, AI, and Global Reallocation

In 2025, global capital is in a state of flux. Geopolitical tensions, U.S. tariff reforms, and the accelerating integration of AI are reshaping the investment landscape. Family offices, long known for their long-term horizons and risk-averse strategies, are now at the forefront of navigating this volatility. Their response? A strategic pivot toward hard assets, cross-border opportunities, and AI-driven sectors, all while awaiting policy clarity. This article unpacks how family offices are deploying capital in uncertain times—and why this could redefine long-term value creation.

The New Normal: Geopolitical Uncertainty and Tariff Disruptions

The BlackRock 2025 Global Family Office Survey reveals a stark shift in sentiment. With 84% of respondents citing geopolitical uncertainty as the top risk, family offices are abandoning traditional risk-on strategies. U.S. tariff announcements have further eroded confidence, dropping expected return optimism from 64% to 51% in just a year. These tariffs, ranging from 10% to 50% on critical imports, have disrupted supply chains and forced businesses to prioritize nearshoring and friend-shoring over cost efficiency.

The result? A surge in demand for diversification and liquidity. Over 68% of family offices are now prioritizing cross-border allocations, with 71% increasing exposure to illiquid alternatives like private credit and infrastructure. This reallocation is not a panic move but a calculated response to a world where policy shifts can overnight upend trade flows and asset valuations.

Hard Assets as a Hedge: Private Credit and Infrastructure Take Center Stage

Private credit has emerged as a cornerstone of family office portfolios. With 51% of respondents expressing optimism about the sector, 32% plan to boost allocations in 2025-2026. The appeal lies in its resilience: special situations and direct lending strategies offer downside protection in a low-yield environment. Infrastructure, meanwhile, is gaining traction as a dual-purpose asset—both a hedge against inflation and a beneficiary of AI-driven demand for energy and grid modernization.

Consider the energy sector. AI's insatiable appetite for data centers has spurred demand for power infrastructure, including mobile nuclear units and renewable grids. HSBC's Willem Sels notes that family offices are increasingly viewing infrastructure as a “structural play” in the AI era. For example, Southeast Asia's digital manufacturing hubs are attracting investments in AI-powered logistics and smart agriculture, backed by government incentives and creative financing models like tokenized equity.

AI as a Sector Catalyst: From Speculative Hype to Strategic Allocation

While AI was once dismissed as a speculative bubble, it is now a structural shift in family office theses. The Citi Private Bank survey reveals 53% of family offices have already allocated capital to generative AI, with 26% considering further investments. Their focus? Sectors where AI can drive productivity gains and create defensible moats.

Healthcare and automation are prime examples. AI is revolutionizing diagnostics and drug discovery, while automation is addressing labor shortages in high-wage economies. Startups like HealthAI, which uses AI for mental health support with human-AI collaboration, and IntelliProcure, which optimizes supply chain analytics, are attracting capital for their high-margin, problem-solving use cases.

Cross-Border Opportunities: Emerging Markets and Tariff-Resilient Models

Family offices are not just diversifying—they're seeking high-conviction opportunities in emerging markets. India's PaySure, which reduced microloan default rates by 40% using AI, exemplifies how technology can unlock financial inclusion. Similarly, Indonesia's AI-powered logistics platforms are capitalizing on government-backed digital manufacturing initiatives.

The key to success in these markets is geopolitical agility. Founders are leveraging Free Trade Agreements (FTAs) and bonded warehouses to mitigate tariff risks, while family offices are adopting agile portfolio management. For instance, platforms like TariffIntel use machine learning to optimize sourcing decisions, reducing compliance costs by 30%.

Implications for Long-Term Value Creation

The 2025 family office playbook is clear: prioritize sectors with structural tailwinds, embrace AI-driven value creation, and deploy capital where policy risks are mitigated by long-term demand. Private credit and infrastructure offer income stability, while AI and automation promise productivity gains. Emerging markets, with their untapped potential and government support, provide a runway for compounding growth.

However, risks remain. Regulatory hurdles, AI commoditization, and geopolitical fragmentation could disrupt these strategies. Family offices are addressing these by partnering with external experts, adopting AI tools for risk modeling, and maintaining liquidity buffers.

Investment Advice for the Uncertain Era

For investors seeking to align with family office strategies:
1. Target AI-Integrated Sectors: Focus on healthcare, automation, and energy infrastructure, where AI solves high-margin problems.
2. Diversify Geographically: Allocate to emerging markets with AI-driven growth stories and government support.
3. Balance Illiquidity with Liquidity: Combine private credit and infrastructure with cash and liquid alternatives to weather policy shocks.
4. Leverage AI Tools: Use AI for risk management and portfolio optimization, even as you invest in AI-driven startups.

In a world of uncertainty, family offices are proving that strategic capital deployment isn't about avoiding risk—it's about managing it. By anchoring their portfolios in hard assets, AI-driven sectors, and cross-border opportunities, they're not just surviving the geopolitical crossroads. They're positioning to thrive in the next decade.