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President Trump's 2025 IEEPA tariffs—one of his signature protectionist policies targeting Chinese imports of consumer electronics, semiconductors, apparel, machinery, and manufacturing inputs—disrupted lower middle-market M&A throughout the year, driving transaction delays, intensified supply chain due diligence, and sustained valuation pressure as owners recalibrated EBITDA projections amid volatile input costs and margin compression.
Once again, the situation is upended. The Supreme Court's February 20 ruling, which struck down the legality of those tariffs, has now sparked refund expectations among affected importers, After the ruling, the Trump administration sought a 90-day delay in refund processing from the Federal Circuit, but the court rejected that effort on March 2. Even so, the President still maintains he has the authority to reinstitute tariffs through alternative mechanisms, such as Sections 122 and 301 of 1974 Trade Act, and the administration doesn’t show any sign of backing down.
All of this has left many owners and investors confused about the state of play. Many affected businesses anticipate legally compelled refunds, but trade attorneys emphasize the process remains complex, with the U.S. Court of International Trade now tasked to develop procedures amid litigation backlogs, 180-day protest deadlines, and funding uncertainties.
All said, businesses expecting refunds may eventually get them, but when and how is entirely unclear.
So, what can a business owner affected by tariffs do in the meantime?
While some pursue potential refunds, private equity firms and strategic buyers continue evaluating businesses based on demonstrated supply chain resilience, financial reporting quality, and recurring revenue stability. Recent rate reductions have increased transaction appetite for well-prepared platforms. While refund uncertainties play themselves out, business owners can evaluate how they stand in three areas:
Proper classification of any tariff-related cash flows supports credible Quality of Earnings analysis during buyer due diligence. This is crucial because buyers will likely scrutinize how tariffs impacted your financial statements and whether those impacts are temporary or structural.
Advisory analysis can model various liquidity scenarios and debt capacity considerations. With potential refunds coming but timing unknown, owners need clarity on their cash flow and borrowing capacity during this uncertain period.
Comprehensive diligence frameworks identify reporting strengths and potential value enhancement opportunities. Beyond tariff impacts, buyers will evaluate supply chain resilience and financial reporting quality
Tariff refunds, supply chain chaos, valuation uncertainty—it's enough to overwhelm any owner. But here's where an M&A advisor offers unexpected value: the things that make a business worth buying are often the same things that make it worth keeping. A business operating within striking distance of its full valuation potential isn't just attractive to buyers; it's resilient, profitable, and positioned for sustainable growth on its own terms.
To discuss how these factors may apply to your business, please schedule a confidential consultation.
Image Credit: Malcolm Hill (Pexels)