The tech market's M&A activity, which showed promising signs at the beginning of 2025, has been severely disrupted by recent tariff announcements by former U.S. President Donald Trump. Despite late-stage startup valuations starting to recover and a few high-profile deals making headlines, the abrupt introduction of tariffs against nearly every major trading partner on April 2, dubbed "Liberation Day," has cast a shadow of uncertainty over the market. In the first quarter, there was a flurry of significant acquisitions. CoreWeave agreed to pay $1.7 billion for Weights&Biases, ServiceNow announced plans to acquire Moveworks for $2.9 billion, and Google's acquisition of cybersecurity startup Wiz was valued at a staggering $32 billion. Other notable deals included Divvy Homes being sold to Brookfield for $1 billion and Next Insurance to Munich Re for $2.6 billion. However, the momentum quickly dissipated when Trump's tariffs caused stock prices to plummet, leading to a state of market limbo. The impact of an uncertain public market is multifaceted. Large public tech companies, which are often the most active acquirers, have seen their stock prices drop due to tariff uncertainty. This has made them wary of using cash for acquisitions, as they prefer to avoid spooking investors in a volatile environment. Instead, they may opt for stock buybacks to prop up their share prices. The valuation uncertainty has also made it difficult for startups to agree on fair deal terms. There is significant back-and-forth, with many companies hesitating to make decisions due to the potential for rapid changes in their value. As a result, startups are more likely to put their acquisition efforts on hold, preferring to wait out the uncertainty. Despite these challenges, some M&A activity is expected to continue. Startups facing difficulties in raising their next round of funding will likely be forced to pursue acquisitions, often at lower valuations. Additionally, well-capitalized AI companies, such as OpenAI, which recently secured a $40 billion funding round, are in a position to acquire smaller firms. OpenAI is rumored to be acquiring AI coding startup Windsurf for $3 billion, demonstrating that well-funded companies can still drive deal activity. However, the events of April have likely compromised M&A activity for the remainder of the year. If the tariffs resume after their 90-day pause in early July or if new trade deals are struck, the market might not see significant improvement. The summer months are traditionally slow for M&A, and the fourth quarter and end-of-year holiday season further narrow the window for deals to be finalized. Industry insiders are pessimistic about the prospects for a stable 2025 M&A market. According to Stellar Tucker, a managing director at Truist Securities, the outlook has shifted from optimism to tepidness. Kyle Stanford, the director of U.S. venture capital research at PitchBook, cautions that the rapid changes in the news, including tariff exemptions and new trade agreements, are creating a high degree of uncertainty. This environment is making it difficult for companies to plan and execute acquisitions, leaving them to navigate a challenging and unpredictable landscape. In summary, while the tech M&A market saw a hopeful start in 2025, the sudden introduction of tariffs has created significant uncertainty, leading to a slowdown in deal-making. Large public tech companies are reluctant to engage in acquisitions due to depressed stock valuations and a volatile market. However, startups in need of funding and well-capitalized AI firms may still drive some M&A activity. The market is expected to remain tepid through the rest of the year, with a slim window for strong deals to materialize in the second quarter. Industry insiders are concerned that the current level of uncertainty may persist, making it challenging for the M&A market to recover fully in 2025. This volatility has critical implications for the tech industry. The lack of a stable M&A market can stifle innovation and growth, as startups may struggle to find exit opportunities, and larger companies may hesitate to invest in expanding their product portfolios. For companies like OpenAI, the ability to acquire smaller, innovative firms could give them a competitive edge in the rapidly evolving AI landscape. However, the broader market remains cautious, with the future of M&A activity hinging on the resolution of trade tensions and economic stability.