The influence of President Donald Trump on cross-border M&A transactions globally can be profound, shaped by his administration's economic policies, regulatory approaches, and geopolitical strategies. His "America First" agenda emphasized protectionist measures, trade renegotiations, and economic nationalism, which reshaped the global investment climate.
Illustration by Alex Castro for Forbes
During his presidency, the heightened scrutiny of foreign investments under the Committee on Foreign Investment in the United States (CFIUS) created challenges for cross-border M&A involving U.S. entities. This was particularly evident in sectors deemed critical to national security, such as technology and infrastructure. The expanded scope of CFIUS reviews under the Foreign Investment Risk Review Modernization Act (FIRRMA) increased regulatory hurdles for foreign acquirers, particularly those from countries like China.
Trump's trade policies, including the imposition of tariffs and renegotiation of trade agreements like NAFTA (resulting in the USMCA), introduced uncertainty into global supply chains, impacting the valuation and strategic rationale of cross-border deals. Companies had to reassess the risks of tariffs and shifting trade rules when evaluating transactions involving the U.S. or its trading partners.
The tax reforms introduced under his administration, including the reduction of the corporate tax rate and changes to the taxation of foreign income, also played a role in reshaping the M&A landscape. These changes influenced how companies structured their deals, with some opting for acquisitions to capitalize on tax benefits or streamline operations within a more favourable U.S. tax environment.
Geopolitically, Trump's policies often strained international relations, especially with key trade partners such as China and the European Union. These tensions impacted cross-border deal-making by creating additional layers of uncertainty and prompting governments in other jurisdictions to adopt reciprocal measures to protect their domestic industries.
Despite these challenges, Trump's pro-business stance, including deregulation in certain sectors, created opportunities for cross-border M&A. Some industries experienced a more favourable regulatory environment under his administration, which encouraged deal-making by reducing compliance costs and barriers to entry.
Overall, President Trump’s tenure introduced a mix of opportunities and challenges for cross-border M&A, with his policies fostering a more cautious approach to global transactions and emphasizing the need for companies to navigate complex regulatory landscapes and geopolitical dynamics.
How Do the Ongoing Armed Conflicts Influence Cross-Border M&A Acquisitions?
The wars in Ukraine, Syria, and Gaza and other armed conflicts can exert a profound influence on M&A trans-actions by creating a range of challenges across geopolitical, eco-nomic, and regulatory dimensions. Geopolitical risk is one of the most significant factors, as conflicts often lead to heightened uncertainty in affected regions and beyond. This uncertainty can make potential investors more cautious, delaying or derailing planned M&A activity. Investor confidence, crucial for the success of cross-border transactions, can be undermined by fears of instability spilling over into neighbouring markets or disrupting global supply chains.
Regulatory challenges also come into play, as governments may impose sanctions, tighten investment screening processes, or restrict transactions involving certain sectors or entities due to national security concerns. These regulatory barriers can complicate the approval process for cross-border deals and reduce the pool of potential acquirers or targets. Furthermore, macroeconomic instability caused by war, such as inflation, currency fluctuations, or disrupted trade, can erode the financial fundamentals that drive M&A transactions. Companies facing deteriorating economic conditions may scale back their ambitions or shift focus away from strategic expansions to address immediate operational challenges.
These effects are often interconnected, creating a feedback loop that can amplify the challenges associated with cross-border M&A in conflict-affected and neighbouring regions. The cumulative impact of these factors underscores the complexity of navigating international transactions during times of geopolitical upheaval.
