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CEOs today face a new kind of volatility, with shifting trade and tariff policies making strategic leadership critical. Will this turbulence rival the 2008 global financial crisis (GFC) or the 2020 COVID-19 pandemic? Time will tell, but as global trade realigns, leading CEOs are acting decisively, turning uncertainty into opportunity.
Bold CEOs reassess operations, make tough calls, and free up capital for future growth. Inaction isn’t an option. Those who move early to reshape their portfolios could gain a lasting edge.
Our latest EY-Parthenon CEO Outlook Survey, conducted in March and April 2025, brings into focus urgent strategic questions at the top of the boardroom agenda. Select the tiles below to find out more.
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This disruption is demanding a rethinking of global relationships – from supply chain strategies to portfolio optimization, cost management to financial resilience. CEOs will need to navigate regional economic shifts with local sensitivity and global awareness. Geopolitical risk management is now a critical pillar of strategic planning, as the world moves toward a more regionalized economy.
CEOs also need to consider how pre-existing pressures, especially around technology; an evolving competitive landscape; a talent squeeze; and shifting customer behaviors are being shaped by the changing global environment.
The most successful CEOs embrace the paradox of uncertainty: planning carefully, acting decisively and shaping their futures with confidence. By balancing agility with discipline, they position their companies to emerge stronger and more resilient.
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Executives must navigate economic volatility and trade conflicts using strategic leadership and flexible scenario planning as traditional markers become more difficult to interpret.
CEOs now find themselves in an environment where the path forward is difficult to discern. Economic predictions face unprecedented complexity amid escalating trade conflicts. Supply chains built over decades may unravel with alarming speed.
Macroeconomic indicators will become increasingly difficult to interpret accurately. The global economy was not showing signs of strength even before the recent rise in uncertainty. Most forecasts had been revised down since the start of the year. They are likely to be downgraded further.
In a landscape this fluid, clinging to single-point forecasts misses the mark. Business leaders need to embrace a mindset shift: it’s multiple scenarios, not singular predictions. Probability distributions offer a more realistic lens to capture the wide bands of uncertainty. This convergence of structural, political and economic forces is challenging the very foundation of traditional forecasting.
CEOs will also have to cultivate an agile mindset to enhance their financial resilience. While credit lines remain open there has been a tightening of financial markets over the past few months. Similarly, an economic slowdown will stress their ability to generate their own capital for critical investments. To remain as resilient as possible, CEOs need to view cost consciousness not as a sign of failure, but as a fundamental aspect of their strategic focus. In doing so, companies can better position themselves to navigate the complexities of today's market while continuously adapting to meet future challenges through investing in the capabilities and assets required to accelerate success.
CEOs clearly recognize this profound uncertainty. A plurality of respondents across the vast majority of countries say that the interconnected issues of geopolitical, macroeconomic and trade uncertainty are the primary risks to achieving their growth forecasts. The more exposed they are to international trade, the more likely this is to be cited as the key concern.
While emerging trade and tariff tensions have disrupted the global landscape, existing challenges, particularly technology adoption and cybersecurity threats, remain. And, though labor markets have been loosened from the COVID-19 pandemic's tight grip, concerns persist about hiring talent for specialized roles, especially in artificial intelligence (AI) and tech.
These tensions are also having an impact on CEO investment decisions.
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Read moreCEOs were already acting to mitigate geopolitical risks prior to recent tariff tensions. The majority (85%) had made alterations to their strategic investment plans over the past 12 months, and over half of those have delayed a planned investment. Nearly 4 in 10 (39%) have relocated operational assets to another geographic market, which is likely to increase in the future as the potential implications of new tariff arrangements are better understood.
Integrating geostrategy into boardroom decisions is critical. CEOs who implement a geostrategy that addresses all the developments of relevance for their company are likely to be better positioned to build a robust strategy that will help navigate an increasingly volatile environment. EY-Parthenon have developed a framework to help CEOs navigate geopolitical challenges and establish their own geostrategy.
The new tariff issue for CEOs is accelerating economic and geopolitical agendas. Half of CEOs (50%) are very or extremely concerned about potential tariff increases affecting their company’s operations and sales in the next 12 months, with only 2% saying they are not concerned.
While the US tariffs announced on April 2 have been put on hold for 90 days, universal 10% tariffs, along with significantly higher tariffs on China and sector-specific tariffs, remain in place. CEOs are considering what steps they can take to mitigate their impact.
It is clear that CEOs and their executive teams will be using a wide range of options to retain competitive position. The already tightening economic conditions have made passing the increased costs on to customers through strategic price adjustments the least-selected option.
Even without the added pricing pressures of extraordinary tariff levels, CEOs were already concerned about the pressures of inflation on their businesses. More than 7 in 10 agree that inflation continues to be a challenge and will be an issue they need to navigate for the next year.
But there are actions CEOs and their leadership teams can take now to get ahead of any reimposition of tariffs:
These actions require CEOs to work across teams and within silos in their company. While tariff and trade issues can be seen simply as a supply chain issue, they are ultimately a strategic concern that will likely shape the global structure and operations of the company for many years to come.
It is not necessarily the most important trading relationship of companies' headquartered locations, or the most local ones, that are of most concern. While 42% of respondents from China are most concerned about the tariff and trade dispute with the US, 8% are more concerned with the relationship between the US and Mexico. This underscores the deep interconnection of the global economy and the complexity of navigating a tariff war – particularly as other major economic powers respond to potential US tariffs.
Rising global trade tensions will also accelerate existing government plans to adopt sovereign industrial policies, with increased strategic state intervention aimed at strengthening industrial security. Successive global crises and increasing geopolitical tensions have exposed vulnerabilities in supply chains, prompting governments across the world to prioritize critical products in key industries.
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Although mergers and acquisitions can be a valuable tool in times of crisis management, strategic investments must be carefully navigated in a volatile M&A market.
Pursuing deals early in crises can unlock unique value creation opportunities for strategically positioned companies. Market dislocations during these periods often lead to significant asset mispricing, where intrinsically valuable companies trade at substantial discounts to their long-term potential. Forward-thinking acquirers with strong balance sheets can capitalize on these temporary valuation compressions.
It is too early to tell what the full impact of the evolving tariff crisis will have on M&A and other corporate investments. While the current intentions of CEOs in the survey with an increase in the appetite to pursue deals, combined with rising dealmaking data through March, point to robust levels of M&A in 2025, there is now some doubt.
There was US$1t of deals announced in the first quarter of 2025, a jump of 25% against the same period in 2024. Over US$500b of this was announced in March, with the month seeing dealmaking at a level last seen during the post-pandemic M&A supercycle.
The number of deals over US$100m announced also climbed 18% against the same period a year earlier.
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Read moreThe deal market was also broad-based, with particular strength in technology and financial services, and big increases in consumer, aerospace and defense, and industrial products.
But mirroring what was seen at the start of the COVID-19 pandemic in March 2020, deal activity has slowed in April to US$250b.
Companies pursuing M&A require precise clarity on macroeconomic factors to accurately value target assets. Economic growth trajectories directly impact future revenue projections and market opportunity sizing, making them fundamental to any valuation model. Without reliable growth forecasts, acquirers risk overpaying for assets whose potential may not materialize.
Tax and tariff policies significantly affect post-acquisition cash flows and integration costs. Shifts in corporate tax rates, international trade policies or sector-specific levies can dramatically alter the financial calculus of a transaction, potentially transforming profitable deals into value-destroying actions.
Capital market conditions establish the baseline for valuation multiples and financing costs. Fluctuations in interest rates, equity premiums, foreign exchange rates, and debt availability influence both acquisition prices and structure. In volatile markets, timing becomes especially critical, as valuation gaps between buyer and seller expectations often widen.
Almost three quarters of CEOs (71%) see potential valuation gaps as being a complexity that could further slow M&A activity in the next year.
Sophisticated acquirers must therefore develop robust economic scenarios to stress-test assumptions and build appropriate risk premiums into their valuation models, ensuring strategic transactions deliver their intended value.
There will likely to be a pause in dealmaking until the situation becomes more certain. But how long this pause lasts, if it is nearer to the two years pause after the GFC or just a few months as with the COVID-19, is yet to be clear.
Historical analysis demonstrates that crisis-period acquisitions often generate superior long-term returns compared with transactions executed during economic expansions. The post-acquisition integration timeline typically aligns advantageously with economic recovery, allowing acquirers to fully leverage new capabilities precisely when markets rebound.
CEOs and companies that maintain strategic discipline while competitors retreat can emerge from financial crises with significantly enhanced competitive positioning and accelerated growth trajectories once economic conditions normalize.
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Value creation can be driven by M&A, when the right acquisition strategy, execution and leadership sits at its core.
While it's often cited that many deals fail to deliver shareholder value due to integration hurdles, cultural misalignment or overestimated synergies, this view can oversimplify a more nuanced reality. In fact, with the right strategy, execution and leadership, M&A can be a powerful driver of long-term growth and value creation.
The potential value of M&A is not always fully understood.
First, short-term performance metrics fail to capture long-term strategic advantages. Second, successful acquirers develop repeatable integration capabilities that improve outcomes over time. Third, defensive acquisitions that prevent competitive disadvantages represent value preservation rather than destruction. Finally, methodological issues in measuring "success" may overlook strategic benefits beyond immediate financial returns.
Value creation typically stems from genuine synergies that enhance competitive advantage – whether through cost efficiencies, complementary capabilities, market access expansion, or innovation acceleration. Deals with clear strategic rationales that extend beyond mere scale tend to outperform pure consolidation plays.
Critical success factors include disciplined target selection with thorough due diligence, rational premium payment that preserves acquisition economics, and meticulous integration planning that begins well before closing. Cultural compatibility proves equally decisive, as organizational friction can rapidly erode theoretical synergies.
The timing dimension cannot be overlooked, as acquisitions executed early in industry transformation cycles or during market downturns often generate superior returns. Ultimately, M&A represents a powerful precision tool – creating substantial value when wielded with strategic clarity and operational excellence yet destroying shareholder wealth when approached with overconfidence or insufficient rigor.
CEOs certainly see the outcome of deals in a different light to accepted studies. More than half of CEOs (55%) believe their recent acquisitions either met or exceeded value expectations. Only 2% believed their purchases were value destroying. On both the buy-side and the sell-side, most deals were seen to create value.
CEOs are looking to take the steps necessary now to navigate the current tensions and position for a new environment. They realize that this new world will be less stable than the previous one. We may also see CEOs being bolder in their transformation and transaction strategies in the face of these challenges. The response to recent crises shows clearly that acting now, rather than hunkering down to wait until the storm has passed, will create greater chances of creating long-term value for all their stakeholders.
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