Trump’s Tariff Hike Already Halting Mergers and Acquisitions in Brazil

(ESTADÃO) Deals aimed at making Brazil an export hub or that rely on imported inputs are among the hardest hit

In addition to affecting exports and the revenues of Brazilian companies, Donald Trump’s tariff hike is also disrupting deals involving potential mergers and acquisitions (M&A) in the country. Several transactions — especially those intended to turn Brazil into an export platform, a common strategy in the sector — have been suspended until the outlook becomes clearer.

“Deals in sectors that depend on exports or imported inputs included in the retaliatory tariff list are being temporarily suspended,” says Isabela Xavier, a partner at the law firm BVA - Barreto Veiga Advogados. “Some are being restructured, and if the new tariff proves unsustainable for setting up an export plant to the U.S. market, the deal likely won’t go through.”

Law firms and M&A boutiques are seeing such cases multiply. At BVA, a European client was negotiating the purchase of a Brazilian machinery and equipment company that sells exclusively to the domestic market. The plan was to turn the plant into an export hub for the U.S. The deal was suspended as soon as Trump’s tariff threat was announced in early July and remains on hold until there’s full clarity about the tariff on the product.

At Brasilpar, a consultancy specializing in transactions involving small and medium-sized companies with revenues between R$100 million and R$500 million, the situation is similar. In the first half of the year, the firm closed four deals, three of them involving foreign buyers or sellers. Now, at least two export-driven transactions have been put on hold.

“Brazil was practically the only one still at the international M&A party, since China and Russia had entered into conflict with the United States,” says Tom Waslander, a partner at Brasilpar. “But deals based on export projects have been suspended, at least for the time being.”

One of Brasilpar’s deals, in the auto parts sector, had a U.S. buyer with a firm offer on the table. Another had several interested parties. Both are now on hold, and in the first case, Waslander believes talks will only resume next year.

As part of Imap, a network of about 500 M&A specialists in 50 countries, Brasilpar still views Brazil as offering cheap assets and a domestic market of 200 million consumers that is highly attractive for acquisitions. “There’s a lot of interest and many inquiries from foreign investors,” he says.

Proof of that, he notes, are the deals closed in the first half of the year. In one, Japan’s Shinagawa Refractories made its second acquisition in Brazil, buying industrial services company Reframax for R$600 million. Meanwhile, Spain’s Tiba acquired logistics company SMX, and the founders of Benefício Fácil sold the company to Pluxee (formerly Sodexo), involving French controlling shareholders.

“Historically, we handle 25 to 30 mandates simultaneously, and many that don’t involve exports are still moving forward,” Waslander says. “The overall impact on the number of transactions will be small.”

Private Equity Funds Also Wary

Daniel Wainstein, founding partner of financial advisory firm Sêneca Evercore, however, says transaction mortality rates have been especially high this year. “Depending on the sector, we’ve advised clients not to go to market right now,” he says. “For those already in progress, we’ve suggested waiting longer before requesting bids, to allow the market to become more constructive and less uncertain.”

That’s because, he explains, beyond exporters, exchange rates — and asset prices — are also likely to be affected by Trump’s measures. “If the real depreciates, we’ll face inflationary pressure with more expensive imports, and the Central Bank will have to raise interest rates,” Wainstein says. “Many companies already struggling will become even more squeezed.”

According to him, some sectors remain attractive, such as renewable energy, infrastructure, oil and gas, and financial services. “But in scenarios where companies are directly affected — by interest rates, exchange rates, or exports — unfortunately, this has led to much higher transaction mortality than historically,” he says. “It’s the advisor’s role right now to avoid accelerating, so as not to kill the deal altogether.”

He adds that, beyond companies themselves pulling back from deals in Brazil, private equity funds — which acquire stakes in companies and are key M&A investors — are also more hesitant. “If the currency depreciates, they won’t be able to deliver the dollar-denominated returns their investors and backers require,” he says. “That closes off two major funding sources.”

This trend is being seen worldwide and was already evident in the first quarter, when Trump’s tariffs were still more of a threat than a reality. Global private equity investment fell 4%, from US$463.8 billion in last year’s fourth quarter to US$444.9 billion in this year’s first three months, according to a study by consultancy KPMG.

The number of transactions also dropped 24%, from 4,958 to 3,762 over the same period. According to the study’s authors, the slowdown was driven by concerns over rising international tariffs, new trade policies, and geopolitical tensions.

In Brazil, the numbers mirror what’s being observed in practice. Until March, M&A activity in the country exceeded 2024 levels, according to data from Kroll Corporate Finance. But since Trump’s tariff actions intensified, the monthly numbers have declined. As a result, while the first half of last year saw 788 deals, the same period this year recorded 733 — a nearly 7% drop.

Published in ESTADÃO on August 4, 2025, and available at: https://www.estadao.com.br/economia/fusoes-aquisicoes-caem-impacto-trump/