Global markets in chaos
Global financial markets have been thrown into turmoil, marked by wild volatility and a pervasive sense of uncertainty. Ever since the Trump administration’s 2025 tariff measures took effect, stock exchanges across Asia, Europe, and the Americas have experienced sharp sell-offs and dramatic swings. Analysts describe a “wave of selling” sweeping across global markets and a “bleak atmosphere on trading floors worldwide,” as traders brace for an escalating trade war and any hint of new tariff announcements. In this environment, almost no region or sector is untouched: major equity indices are tumbling, safe-haven assets are surging, and corporate leaders are sounding alarm bells about what lies ahead.
Investor anxiety is palpable. Market participants are fleeing riskier assets for the safety of gold, cash, and government bonds – indeed, gold prices have soared to record highs as nervous investors seek shelter. Top financial executives report that clients and business leaders are more anxious about the economy than at any time in recent memory. Many fund managers have responded by “de-risking” portfolios or simply sitting on their hands, avoiding big moves amid the uncertainty. It’s not just the immediate impact of tariffs unnerving markets; it’s the growing fear of knock-on effects from a prolonged trade conflict. “Investors aren’t just reacting to the initial tariff volley… the real jitters stem from the potential second-order effects of a drawn-out trade war: slower global growth, crimped investment, and waning consumer confidence,” as one market analyst explained. In short, confidence has been shaken and no one is sure where the bottom lies, prompting a collective wait-and-see approach that only adds to the standstill.
IPOs and M&A deals put on ice
The tariff-induced turmoil has directly upset what dealmakers had expected to be a blockbuster year for initial public offerings and mergers. Bankers are hitting the brakes – forecasts for a robust first quarter on Wall Street were soured by the trade war’s onset and spiking volatility. In the U.S., first-quarter M&A activity actually fell 13% year-over-year as confidence wavered. Europe fared slightly better with a 7% uptick in deal volume, but that was buoyed by a few mega-deals rather than broad-based strength.
Now, many corporate boards are hesitant to pursue big moves amid unpredictable tariff fallout. Stock market volatility has become a serious threat to IPOs, in particular. Since Trump’s January inauguration, U.S. indexes have slumped, which “dampened optimism for 2025 IPOs” after years of companies waiting for the right moment to go public. One JPMorgan capital markets head noted that both issuers and investors crave certainty – they need to understand how tariffs will impact business models in order to price new stock offerings appropriately.
That certainty is absent right now. A few high-profile IPOs that did go ahead have struggled: Veture Global’s shares plunged nearly 60% post-IPO, erasing $33 billion in value, and much-hyped AI startup CoreWeave debuted only to sink below its offer price. Such stumbles have sent a chill through the IPO pipeline, making other startups reconsider timing. “If you put the combination of tariffs and overall economic uncertainty together, it makes it harder…to have real comfort in the trajectory of your own business” and perform well after listing, explained Robert Stowe of Barclays.
Indeed, some European firms are pulling plans: Germany’s Stada abruptly postponed its Frankfurt IPO last week due to market volatility, and another German IPO candidate (OLB) opted to sell itself to a French rival instead of facing choppy public markets. The exuberance that dealmakers felt just a few months ago has evaporated – “exuberance has left the market and more uncertainty has creeped in,” as JPMorgan’s European M&A co-head summed up bleakly.
Venture capital funding faces headwinds in Europe
For the Western Europe’s start-up ecosystem – from London to Berlin to Paris – these tumultuous conditions are raising red flags. Venture capital thrives on growth and confidence, and both are being undermined by the tariff war’s broader uncertainty. Experts note that if risk appetite diminishes, a protracted US–EU trade war could extend fundraising timelines for VCs and start-ups and even suppress valuations on both sides of the Atlantic. In other words, European founders may find it takes longer to raise new funding rounds, and those rounds could come with tougher terms or lower price tags than just a few months prior.
Several forces are at play. First, the pipeline for exits is choked – with IPO windows effectively closing and corporates cautious on M&A, venture investors worry about how they’ll eventually cash out. That uncertainty tends to make VCs more conservative in writing new checks. Second, the tariffs themselves can directly hit startups’ prospects. Many European tech startups rely on international supply chains or sell into the U.S. market; sudden trade barriers mean higher costs and lost revenue. “US tariffs on the EU could slow economic growth, reduce trade revenue for startups and create uncertainty in the [VC] market,” warns Supachai “Kid” Parchariyanon, a venture investor in Southeast Asia. If European startups see their growth trajectories stall – for example, a hardware manufacturer facing 20% price hikes on exports – investors may revalue those companies downward.
Even at a macro level, capital flows are at risk. France’s President Emmanuel Macron went so far as to call for European countries to suspend investment in the United States in response to Trump. Such rhetoric, if acted upon, could mean fewer U.S. funds investing in Europe or vice-versa. Already, some U.S. venture funds might hold back on European deals until the transatlantic tensions clarify.
Overall, the once-booming European VC scene is bracing for a slowdown in deal flow as investors adopt a wait-and-see stance. As one report put it, a long trade war could cut global investment by one-tenth due to the pervasive uncertainty– a sobering figure that has European founders and VCs tightening their belts.
Conclusion: uncertainty as the new normal
In the immediate term, Trump’s 2025 tariff gambit has injected a heavy dose of uncertainty into global business – and Europe’s venture capital sector is squarely in the crossfire of this trade crosswind. The chaotic market conditions have delayed IPO dreams and put big-ticket deals on hold, depriving VCs of clear exit pathways. More critically, the broader economic uncertainty and retaliatory posturing have made investors more cautious, threatening to tighten the flow of funding to new ventures in Western Europe and the UK. For entrepreneurs and investors alike, the name of the game in 2025 will be resilience and adaptation. European VCs may need to adjust valuations and timelines, focus on more defensible business models, and court a wider range of markets for growth.
Governments in Europe, for their part, are scrambling to mitigate damage with policy responses or diplomatic efforts. How long this trade standoff lasts is anyone’s guess – and that very unpredictability is perhaps the biggest challenge. As one market strategist noted, the recent shock “makes it very clear” that the outcome was worse than expected. Until clarity emerges, volatility and vigilance will define the landscape. The hope among Europe’s startup community is that once the dust settles, their strong fundamentals will shine through and investor confidence will return. But for now, venture capital in Europe must navigate one of its rockiest periods in recent memory, caught in the turbulent wake of a transatlantic tariff war that shows no immediate signs of abating.
