M & A Nuggets: The Winds Of Trade Wars

Trade wars have been in the news this year, primarily the imposition of tariffs on the import of products from and to the United States and China.  Have the trade wars impacted mergers and acquisitions activity?  Companies which import raw materials on which tariffs have been imposed pay more to purchase the materials and companies which export product to China have been hurt by its retaliatory tariffs.  Indirectly, manufacturers whose customers have been hurt by tariffs can see their revenue fall.  That is the theory.  Here are actual statistics:

• According to data compiled by Refinitiv, transactions involving Asian companies declined 43% year over year in the first half of 2019 and global transactions fell 16% year over year in the third quarter of 2019, the lowest volume since 2016
• In the United States, transactions year over year for the third quarter of 2019 were 40% below the prior year, the lowest quarterly level since 2014

The theory and the facts seem to support the conclusion that the trade wars have had a substantial impact on global M&A activity.