Potential Impact of Trump Tariffs on the Projected Surge in 2025 IPOs -

Stock markets are showing optimism surrounding Donald Trump’s return while seemingly overlooking the possible imposition of tariffs he has often suggested for America’s major trading partners.

IPO bankers, who are gearing up for what many expect to be an excellent year for public offerings, have a straightforward request for the president-elect: Can he avoid meddling with the market?

Read: Three possible futures for the global economy if Trump implements new trade tariffs

Despite a year that has witnessed over a 60% increase in volume compared to 2023, US initial public offerings remain on the path to recovery following a series of interest rate hikes that curtailed pandemic-era stimulus measures and led to a stock market correction.

The exact timeline for a return to pre-pandemic levels is still unclear, but 2025 is in focus—assuming the new administration’s policies don’t disrupt the existing momentum.

“The primary concern is the potential introduction of unnecessary volatility into the market,” commented Clay Hale, co-head of equity capital markets at Wells Fargo & Co.

“In a volatile environment, investors often focus on their own portfolios and may hesitate to invest in emerging companies from private markets.”

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Taking a company public is often compared to navigating an aircraft carrier: it’s a lengthy process that requires meticulous documentation, investor engagement, and balance sheet optimization.

With a longer phase of relative stability, dealmakers have taken this opportunity to prepare for prominent listings such as CoreWeave, Medline Industries Inc., and Genesys Cloud Services Inc., which could collectively raise billions of dollars.

A wave of large deals next year could surpass the $43 billion accumulated through initial share sales this year on US exchanges, as per Bloomberg data.

Despite the markets approaching historical highs amid optimistic forecasts for economic growth, “some uncertainty still remains,” asserts Kevin Foley, global head of capital markets at JPMorgan Chase & Co.

“While there is optimism that the new administration will promote deregulation and alleviate inflation, the introduction of tariffs typically drives inflation,” Foley stated in an interview.

Private equity challenges

The resurgence of sharply increasing costs could prompt the Federal Reserve to reevaluate its interest rate policies.

This potential scenario may further complicate the predicament facing private equity firms, which currently hold nearly $3 trillion worth of companies ready for public offerings or sales, exacerbated by climbing debt servicing costs.

“Much of the upcoming activity is likely to stem from the private equity sector,” noted Arnaud Blanchard, global co-head of equity capital markets at Morgan Stanley, whose firm anticipates a series of deals backed by buyout firms.

“However, the market isn’t like it was in 2020, and there remains a preference for high-quality assets, where raised amounts and implied market caps are significantly substantial.”

Deal activity in 2025 is projected to more than double the figures seen during the lowest point of the post-pandemic downturn if the largest anticipated deals are executed, as reflected in Bloomberg’s analysis. Nevertheless, this does not provide an easy option for companies grappling with balance sheet challenges.

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“Certain PE-backed deals will target premium assets showcasing growth and scale, while others must confront leverage challenges, ensuring they establish valuations that attract buyers,” explained Jimmy Williams, head of West Coast technology ECM at Jefferies Financial Group Inc.

“For the latter, there’s a conflict between what investors are willing to pay versus what sponsors might agree to for companies they have held for extended periods.”

The current landscape for US IPOs exhibits a significant lack of technology-related debuts since 2021. This sector typically drives the bulk of deal activity, yet it comprised less than 20% of this year’s proceeds on US exchanges, according to Bloomberg data.

This pattern is finally poised to change following a gradual emergence of success stories.

Companies like Reddit Inc. and Astera Labs Inc. have showcased as standout debuts this year. Recently, ServiceTitan Inc. set its IPO pricing significantly above an already raised range, with its share price surging by 42% on its first trading day.

Read: Arm, Reddit, and Astera performance demonstrate strength in AI IPOs

Several firms planning IPOs in the first half of 2026 are now aiming for the latter half of 2025, inspired by the premium trading of stocks like ServiceTitan and OneStream Inc., according to Paul Abrahimzadeh, Citigroup Inc.’s co-head of ECM for North America.

“There’s a palpable anticipation within the venture community,” Abrahimzadeh stated. “In discussions with VCs on the boards of private companies, there’s a collective eagerness to showcase returns to LPs and realize gains without delay.”

Valuations

It’s promising that investors are showing a degree of flexibility regarding valuations in light of pandemic-era expectations.

“We’re witnessing a growing willingness among companies to accept down rounds during IPOs,” noted Keith Canton, JPMorgan’s head of Americas ECM. “Such down rounds aren’t affecting how IPOs are being traded, prompting sponsors and management teams to focus on initiating the process.”

“We foresee entering 2025 with a very active US IPO market—significant sponsor monetizations, an influx of consumer and tech assets, and a fintech pipeline that hasn’t been this developed in several years,” expressed Daniel Burton-Morgan, head of Americas ECM syndicate at Bank of America Corp.

Swedish digital payment company Klarna Group Plc is leading the way, having filed confidentially for a US listing in November.

Additionally, fee-free fintech service Chime Financial Inc. is also gearing up for a 2025 launch, as reported by Bloomberg News here.

The increasing potential for deregulation surrounding crypto assets has rekindled interest in the possibility of launches in this sector, including Circle Internet Financial Ltd. and trading platform eToro.

Read: Crypto volatility surges as Trump-fueled rally begins to decline

Not everyone lamented the technology sector’s brief retreat from the spotlight.

“We have observed genuine diversity in the sectors supporting the IPO market this year,” remarked Morgan Stanley global co-head of ECM Eddie Molloy.

Promising 2024 ahead

With the market predicting rate cuts, and Trump indicating that he doesn’t plan to replace Fed Chair Jay Powell, many expect a successful year ahead.

“With macroeconomic stability, the elections behind us, and an environment seemingly conducive to capital market growth,” said Elizabeth Reed, global head of equity syndicate at Goldman Sachs Group Inc.

“These are the indicators we monitor collectively, and we feel optimistic about an uptick in activity as we move closer to 2025.

The anticipated lower interest rate environment, combined with a Trump administration viewed as favorable for mergers and acquisitions, could drive companies and private equity firms towards aggressive acquisition strategies. This may lead potential public companies to contemplate rapid sales as an alternative, according to Jill Ford, co-head of ECM at Wells Fargo.

“While the IPO market is exhibiting signs of recovery, it hasn’t fully launched yet. Therefore, it’s important to approach every process with a dual strategy, as there’s a legitimate possibility that these companies would prefer an M&A route,” Ford shared in an interview.

“This is particularly pertinent given a loosening regulatory landscape and robust balance sheets accompanied by a strong currency.”

Read: Wall Street puzzled by the Fed’s motivation to adjust key tools

It is difficult to predict which of Trump’s campaign policies will materialize during his presidency, but with numerous financiers ready to serve in his administration, many believe he won’t overlook Wall Street’s interests.

“It’s probable that everyone is in a state of ‘it’s too early to determine’ how much of the campaign narrative will be realized,” commented Tom Swerling, global head of ECM at Barclays Plc. “The market seems to be opting to perceive the potential benefits of a Trump presidency positively.”

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