Trump's tariff reversal threatens to extend the M&A downturn as Wall Street grapples with hiring freezes, bonus blues

• Trump's tariff pause was great for stocks, but for deals, it just kicks the can down the road.
• The pause threatens to extend Wall Street's hiring freezes and further lower bonuses.
• Bankers and PE execs share how they are spending their time as they wait for clarity.

Long hours, hiring freezes, and a souring bonus outlook. This is the life of the Wall Street dealmaker right now as M&A stalls amid continued uncertainty over Trump's tariffs.

On Wednesday, President Donald Trump announced a 90-day pause on most tariffs, with the exception of China, which is now facing tariffs of up to 125%. While the reversal lifted stocks, resulting in the biggest single-day gain for the S&P 500 since 2008, it isn't expected to do much for M&A, which was already on the fritz leading up to Wednesday's announcement. In fact, some are predicting Trump's pause could make things worse.

"We're going to have three more months of paralysis," said Alan Johnson, a finance industry compensation consultant. "Buyers and sellers are going to say, 'I'm going to wait,'" added the Johnson Associates founder.

It's not just investment bankers who are sitting on the sidelines. Private equity deal pipelines are also on hold as investors and target companies try to understand how current and future tariffs could affect business revenues and supply chains.

"If you're an investor, unless you have an amazing conviction that you're insulated from the tariffs, you're sitting on your hands and waiting," said the head of a sector at a major private equity fund.

As one investor at a midmarket private equity firm put it: The news of the 90-day pause was well-received, but nothing to celebrate. "We pop bottles when we have great exits that earn our investors tons of money, not for short-term noise."

Inside the lull

What do dealmakers do with their time when there are no deals? The people who spoke to BI said they and their teams aren't going home any earlier. In fact, some are traveling more to stay in touch with skittish clients even as they predict year-end bonus declines. Others are working longer hours to understand what the tariffs will do to their portfolios.

Eric Stetler, the head of mergers and acquisitions at the independent investment bank D.A. Davidson, told BI that far more of his time is being spent keeping clients updated.

During a time like this, Stetler said, "just staying in front of clients" is paramount. "People want to know what's happening."

Stetler said senior bankers tend to devote about "75% of their time" to existing client mandates and the rest to drumming up new business. "At times like this," he said, "that reverses, or close to reverses."'

"That's not to say that our new business development activity is pausing because we're still having a lot of conversations," he said. "We're still pitching new business. We're preparing businesses for sale, and looking at processes with our clients."

The PE sector head said private equity deal teams are spending more time with their portfolio companies or updating their models with the latest tariff numbers.

"The announced tariffs were more severe than what was expected, so we've been having to update Plan B, Plan C, and Plan D to make sure we can mitigate the effects," the executive said before Trump announced the 90-day pause.

Hiring and bonuses

Hiring is largely frozen, according to a banker and Wall Street recruiter. "What I'm hearing is that it's kind of like, 'Maybe this is not a good week to push something through. Can we give it a week or two?'," the headhunter said.

Though the firms this recruiter communicates with had yet to invoke full-on hiring freezes — which are rigid postures that tend to presage layoffs — the word "freeze" had been mentioned in some conversations.

"If things don't get better," the recruiter added, "there will be layoffs."

Bonus expectations have also hit the skids as the prospect of closing a deal gets pushed further into the future. As Stetler explained: "It takes roughly four to six months to run the sale process" on a live deal. Even if a buyer decided to pull the trigger on a purchase today, "you are looking at a late Q3, probably, at best," for when such a merger might close.

Trump's tariff pause threatens to further dampen bonuses by pushing the timeline out even more — potentially to 2026, said Johnson, the compensation consultant.

"Would you do a deal now if you're a buyer? In 90 days, maybe he changes his mind again, or 90 days becomes 30 days, or 90 days is tomorrow, or 90 days is 180 days," Johnson said, referring to President Trump. "Maybe things will be a lot better in three months, the sun will start shining. But now we're in what, July? And then by the time the lawyers get involved and you sign an agreement, it's 2026."

Get in touch with these reporters. Reed Alexander covers Wall Street banks; he can be reached via email at ralexander@businessinsider.com, or SMS/the encrypted app Signal at (561) 247-5758. Alex Nicoll can be reached via email at anicoll@businessinsider.com, or Signal at @alexnicoll.01