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IF THERE is one thing those who work
in mergers and acquisitions don't like –
buyers, sellers, investment bankers, and,
yes, lawyers – it's uncertainty.
However, uncertainty precisely is what
has been handed to these M&A players
as they start manoeuvring through a brave
new world of tariffs under US President
Donald Trump's second term. It started
with a bang when he signed an executive
order on his first day in office decreeing a
25 percent tariff be imposed on the vast
majority of Canadian (and Mexican, for
that matter) goods, essentially tearing up
a North American free trade agreement he
had signed in his first term.
ose tariffs indeed came into effect
on March 4, and there has been a roller-
coaster of tariffs-on, tariffs-off since then,
and much might happen by the time you
read this. Still, questions remain. How
long could they last? Exactly what sectors
are affected? What is Canada's response?
Will both sides raise the stakes with
retaliatory measures?
In this climate of uncertainty, lawyers
involved in M&A and other areas are
fielding questions and charged with
helping their clients understand what's
going on and how it will impact their
ability – and desire – to make deals.
Feature
TRUMP TARIFF
TREPIDATION
M&A LAWYERS SAY DEALMAKING COULD SLOW DOWN
AS BUYERS AND SELLERS MANOEUVRE THE MINEFIELD
OF POTENTIAL TARIFFS UNDER U.S. PRESIDENT DONALD
TRUMP'S SECOND TERM, WRITES ZENA OLIJNYK
"ere's really only one thing that is
truly impacting M&A activity right now,
and that is uncertainty," says McCarthy
Tétrault LLP's Shea Small. If there was
certainty about tariffs and what sectors
would be affected, he says, "we could figure
out how to get around it … and address it."
Small adds: "In some cases, some businesses
may be drastically hurt, but others will
retool and figure out a way to deal with it."
However, he says, "the fact that things keep
changing" makes it hard to know how to
move forward.
What makes the situation particularly
frustrating for dealmakers is that 2024
turned out to be an excellent year for M&A,
especially in the second half, driven by lower
interest rates and lots of capital available on
the balance sheet of private and strategic
players. Says Small: "e thinking before all
the talk of tariffs was that 2025 was going to
be another good year for M&A."
As just one insight into how the US govern-
ment's economic threats against Canada –
including tariffs – have cast a pall over M&A
activity, US deals for Canadian companies in
January hit a 22-year low compared to the
same month in previous years. According to
the London Stock Exchange Group, only 19
mergers or acquisitions of Canadian compa-
nies by US acquirers occurred in January.
