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Matt Malone examines how tariffs and deregulation under the new administration could shape private markets
Key Takeaways
- Higher tariffs may challenge businesses reliant on international inputs but could benefit domestically focused lower middle-market firms.
- Broad deregulation is expected to unlock economic growth, accelerate venture investment, and drive innovation, particularly in AI and crypto markets.
- The new administration's policies will require careful navigation, emphasizing opportunities in domestic-focused businesses and innovation-driven sectors.
Transcript
Hi everybody. We're coming out with our 2025 outlook and talking about some key issues and how they may impact private markets. As everybody knows, we have a new administration coming in. And two of the big issues that people are focused on, and, and thinking through how they might impact investing in the economy, are the potential for higher tariffs on international goods and on the potential broad deregulation through, the DOGE or through other operations of the Trump and the broader Trump administration.
And both these things, kind of have different impacts, and maybe counterbalancing impacts and tariffs. We would expect, of course, to impact businesses that are more focused on inputs from abroad or manufacturing abroad. I think, the tariffs could be a headwind for some larger businesses, especially in PE in the upper part of the market in PE, and then indirectly, private credit lenders that are lending in that space.
I think it could be a tailwind for, the lower middle market that maybe more domestically focused businesses. And that's a space we've been focused on even before the, the change in administration tariffs were announced. So that's where we think there could be some interesting bifurcation of the market due to tariffs.
When it comes to deregulation broadly, we think deregulation is is pro-business, and should help unlock, some of the economy may accelerate venture investing. There's certainly a lot of capital looking to flow into venture. There's a lot of excitement around AI, a lot of new business, potential around AI. We've also seen the crypto market come back to life. So we think this deregulatory state will help spur innovation and help continue to drive those parts of the private markets that are focused on that part of the economy.
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