Navigating the Uncertainty: Tariffs, Trade Tensions, and the Impact on Business Valuations

As of early 2025, businesses, investors, and valuation professionals are grappling with a new wave of economic uncertainty following the announcement of tariffs by the United States government. These measures have renewed fears of a broader trade war and are already reverberating through equity and bond markets. At Quist Valuation, we are closely monitoring the situation to understand its implications for business value. While the long-term effects remain uncertain, now is the time for companies to evaluate their exposure, engage in scenario planning, and consider interim valuations. Proactive steps taken today can help business owners and advisors make more informed decisions in the months ahead.

What Is Known

The United States implemented a comprehensive tariff regime in early 2025, marking a significant shift in trade policy. This includes:

• A universal ten percent tariff on all imported goods.
• The introduction of reciprocal tariffs that attempt to mirror tariffs imposed by other nations.
• Sector-specific tariffs targeting key industries such as automotive, semiconductors, manufacturing equipment, and consumer electronics.
• And changes to the “de minimis exemption”, which restricts low-value imports previously exempt from tariffs, thereby affecting cross-border e-commerce and small parcel trade.

These broad measures have disrupted global trade flows and increased input costs for a wide range of U.S. businesses. In response, several countries—including China—have either imposed or raised tariffs on American exports, escalating concerns of a protracted trade war.

Financial markets have already begun to price in these risks. Equity markets have experienced elevated volatility as investors reassess corporate earnings potential, supply chain stability, and inflationary pressures. Simultaneously, bond markets have reacted with rising yields and wider credit spreads, especially for companies with international exposure or tight margins. The uncertainty surrounding policy duration and retaliatory measures has introduced a new layer of risk into investment decision-making and business planning.

It is important to note that exemptions, revisions, and clarifications to the tariff policy are occurring on an ongoing basis, sometimes daily. As such, the specifics of the tariff landscape may have evolved by the time you are reading this, underscoring the need for vigilant monitoring and flexible planning.

What Remains Unknown

Despite these developments, significant uncertainty persists:

• Duration and Scope: It remains unclear how long the tariffs will remain in place or whether they will expand further.
• Policy Reversals or Retaliation: The potential for trade negotiations, policy reversals, or retaliatory tariffs by other countries creates a wide range of possible scenarios.
• Impact on Supply Chains and Consumer Demand: The full downstream effects on costs, pricing, and demand across sectors have yet to be quantified.
• Macroeconomic Policy Response: The Federal Reserve and fiscal policymakers may adjust strategies in response to inflationary pressures or slowing growth—adding another layer of complexity.

This high degree of uncertainty complicates investment decisions, strategic planning, and business valuations alike.

Implications for Business Valuations

At Quist Valuation, we regularly assist clients in navigating through volatile market conditions. A foundational principle in valuation is that appraisals must reflect what is known or knowable as of the valuation date. For clients conducting annual year-end valuations as of December 31, 2024, the current trade tensions and newly imposed tariffs would not have been reasonably foreseeable or measurable at that time. As such, those risks and their potential impacts would not typically be incorporated into year-end conclusions of value.

However, the current developments could materially impact the future financial outlook for certain businesses. This is particularly true for companies that rely heavily on imported goods, operate within affected sectors, or have global customer bases. In these cases, it may be prudent to consider an interim valuation to reassess the company’s value in light of these new economic realities. Interim valuations can be valuable tools in informing shareholder communications, financial reporting, or transactions, especially during times of structural market change.

Our Advice to Clients

Given the current environment, we recommend the following actions:

1. Evaluate Exposure: Assess your company’s exposure to tariffs and global supply chains. Understand which cost centers, margins, or contracts may be impacted.
2. Scenario Planning: Develop multiple financial outlooks reflecting various trade and economic scenarios. Stress testing your models against adverse assumptions will help prepare for a range of possible outcomes.
3. Consider Interim Valuations: If your business is materially impacted by the new tariffs or changes in global trade policy, an interim valuation may be warranted to provide updated insight for internal planning, stakeholder reporting, or transaction readiness.
4. Maintain Documentation: Ensure that your assumptions, forecasts, and decision-making frameworks are well-documented—especially if you expect to raise capital, issue equity, or engage in shareholder transactions in 2025.
5. Stay Informed: Policy dynamics are likely to evolve over the coming months. Staying up to date on legislative actions, trade developments, and economic policy responses will be critical.

Looking Ahead

While uncertainty creates challenges, it also underscores the importance of timely, well-supported business valuations. At Quist Valuation, our role is not just to deliver valuation conclusions but to serve as a strategic partner to our clients during times of both growth and disruption. We are here to help you assess risks, adapt to changing circumstances, and make informed decisions.Please don’t hesitate to reach out to Shina or Parker at Quist if you would like to discuss how the current economic landscape may impact your business or whether an interim valuation may be appropriate.