U.S. Business Landscape in May 2025: Navigating Tariffs, Market Volatility, and Strategic Shifts

26 May 2025

The U.S. business environment in May 2025 has been marked by significant developments, including tariff negotiations, market fluctuations, and strategic corporate decisions. Here's an in-depth look at the key events shaping the economic landscape.

President Donald Trump's administration has been at the forefront of trade discussions, particularly concerning tariffs on European Union (EU) imports. Initially set to impose a 50% tariff on EU goods starting June 1, the administration has delayed this action until July 9 following a constructive conversation with European Commission President Ursula von der Leyen. This postponement aims to provide both parties with additional time to negotiate and potentially avert a trade escalation.

The announcement of these tariffs had previously unsettled global markets, with major indices experiencing volatility. Companies like Apple, which rely heavily on global supply chains, faced investor scrutiny due to potential cost increases and supply disruptions.

The U.S. stock market has experienced fluctuations in response to trade policy uncertainties and economic indicators. While the Nasdaq Composite saw gains in late April, concerns over tariffs and inflation have led to cautious investor sentiment.

Economic data indicates that U.S. business activity improved in May, driven by a temporary pause in the trade war with China. However, the imposition of new tariffs has led to increased prices for businesses and consumers, with input inventories reaching their highest level in 18 years.

Major corporations are adapting to the evolving economic landscape through strategic decisions.

Walmart: The retail giant announced plans to cut approximately 1,500 corporate jobs to streamline operations and reduce expenses. Despite strong first-quarter earnings, the company cited tariff pressures and the need for efficiency as reasons for the layoffs.

Target: CEO Brian Cornell emphasized that price increases would be a "very last resort" amid ongoing challenges from tariffs and economic uncertainty. Target plans to open 20 new stores in 2025, focusing on maintaining price competitiveness and supporting American families.

General Motors (GM): Facing declining electric vehicle (EV) sales and infrastructure challenges, GM is reportedly reconsidering its EV strategy. The company is lobbying against California's strict emissions mandates and advocating for a single national standard, citing affordability and consumer choice concerns.

The private equity sector is experiencing shifts as well. Orlando Bravo, a pioneer in the field, has warned wealthy individuals about the risks associated with continuation vehicles—funds that acquire hard-to-sell or overvalued assets. Bravo cautions that affluent investors may inadvertently provide liquidity to private equity firms seeking to offload underperforming investments.

Additionally, Canadian pension funds like CDPQ and CPP are reassessing their heavy U.S. exposure in favor of more investments in the UK and France, citing peak valuations and recent U.S. market uncertainty. European and Asian investors are increasingly turning to global equity funds excluding U.S. assets, with record inflows fueled by concerns over U.S. economic stability following Trump's re-election and proposed tariffs.

May 2025 has been a pivotal month for U.S. businesses, characterized by tariff negotiations, market volatility, and strategic corporate shifts. As companies navigate these challenges, adaptability and proactive planning remain essential for sustaining growth and competitiveness in an evolving economic landscape.