The tech market's M&A activity, which showed promise at the beginning of 2025, has stalled due to the uncertainty surrounding tariffs imposed by the Trump administration. Despite a strong start to the year, with notable deals such as CoreWeave's $1.7 billion acquisition of Weights&Biases and ServiceNow's $2.9 billion acquisition of Moveworks, the market has taken a hit since the tariffs were announced in April.

According to PitchBook data, there were 205 U.S. startup acquisitions in the first quarter of 2025, but the momentum has slowed down significantly since then. The tariffs, which were announced on April 2, have caused tech companies' stock prices to plummet, leading to a state of limbo in the market. A 90-day pause on the tariffs was announced a week later, but the uncertainty has already had a significant impact on M&A activity.

Experts believe that the volatile public market is stalling M&A activity, as large public tech companies, which are typically the most active acquirers, are directly affected by the tariff uncertainty. Their stock prices have taken a hit, and some of their core products or supply chains could face tariff impacts. "The large public companies, they're going to have a really tough time with depressed valuations in their stock," said Kyle Stanford, the director of U.S. venture capital research at PitchBook. "Even if they have cash, they don't want to put it to work in an uncertain market and kind of spook investors."

Another hurdle is the uncertainty around valuations, which has lingered for the past few years. Many late-stage startups are no longer worth their frothy 2021 valuations, but their current worth is not concrete either. "There's a lot of back-and-forth leading to significant uncertainty," said Ronan Kennedy, who leads the capital advisory team for the investment firm B Capital. "Businesses don't want to make a decision when waiting a few days could have led to a different decision" or valuation.

Despite the slowdown, some deals will still get done. Thomas Earnest, a partner at the law firm Mintz, believes that startups that are unable to raise their next round of funding will still need to pursue acquisitions, likely at lower valuations. Well-capitalized AI companies that are private and pumped up with cash are also likely to snap up smaller companies. OpenAI, which just raised a $40 billion funding round, is rumored to be acquiring AI coding startup Windsurf for $3 billion.

However, the outlook for the rest of the year remains tepid. PitchBook's Stanford fears that the events of the first few weeks of April could have already sidelined M&A activity for the rest of the year. If the tariffs resume in early July or new trade deals are struck in the meantime, it may not matter much. "I think the prospect of a stable 2025 seems pretty low at this point just because of the changes," Stanford said. "We all know how much the news has changed in the past two weeks, what and how small or steep, who's getting exceptions or what's not getting exception. And [it] really creates a lot of uncertainty."

The second quarter is expected to be slow, and the fourth quarter will likely be affected by the end-of-year holiday slowdown. This leaves a tiny window for strong M&A deals to get done. As the market navigates this uncertainty, one thing is clear: the promise of a strong M&A activity in 2025 has been derailed by the tariff uncertainty.