In 2025, the private equity (PE) industry is navigating a challenging landscape shaped by significant shifts in US trade policy under President Donald Trump’s “economic liberation” agenda. The introduction of sweeping trade tariffs has created both obstacles and opportunities for PE firms.

Resilience and Adaptability: Private equity firms have a proven track record of resilience, having successfully managed through past economic disruptions like the COVID-19 pandemic and the Global Financial Crisis. Their long-term investment horizon and active ownership approach enable them to weather periods of uncertainty and volatility.

Structural Advantages: Several structural advantages position PE firms to capitalize on current market conditions:

• Long-term Investment Horizon: This allows firms to focus on fundamental value and ride out short-term market fluctuations.
• Dry Powder: Significant levels of uninvested capital provide the flexibility to invest opportunistically in undervalued assets arising from market dislocations.

Short-term Impact: The new trade tariffs have introduced market uncertainty, potentially delaying PE exits. This uncertainty is likely to increase secondary market activity and the use of NAV-based financing, offering PE firms alternative liquidity options.

Strategic Opportunities: Despite the challenges, the current trade policy shifts present strategic opportunities for PE firms. By leveraging their structural advantages and maintaining a focus on long-term value creation, PE firms can identify and invest in temporarily undervalued assets with strong growth potential.

Private equity’s ability to endure and capitalize on periods of uncertainty remains a defining characteristic of the asset class. The industry’s strategic clarity and adaptability will be crucial in navigating the evolving trade policy landscape and identifying opportunities for value creation.