US Tariffs Hit Near-Century High, Disrupt Private Markets, PitchBook Analysis Shows

What's New

According to PitchBook's Q3 2025 Quantitative Perspectives Report, US tariff rates have surged to 18.2%—the highest level in nearly a century—following the administration's "Liberation Day" reciprocal tariff announcement. This unprecedented trade policy shift has created significant uncertainty across private markets, with dealmaking timelines extending and many limited partners and general partners rethinking capital deployment strategies despite otherwise supportive macroeconomic conditions.

Why It Matters

This tariff escalation represents a fundamental disruption to the private markets ecosystem at a time when the industry was positioned for recovery. The policy uncertainty is stalling the exit environment that has already kept distribution yields at Global Financial Crisis-era lows, potentially extending the liquidity drought that has trapped gains in older funds and forced allocators to reconsider their private market exposure strategies.

Big Picture Drivers

• Policy Uncertainty: Trade restrictions and temporary tariff pauses are complicating business planning and investment decisions across sectors

• Exit Drought: Private equity and venture capital funds are experiencing prolonged distribution challenges, with median buyout holding periods reaching 3.8 years

• Rate Environment: The Federal Reserve has paused rate cuts to evaluate tariff impacts, keeping borrowing costs elevated and affecting deal financing

• Valuation Reset: Down rounds in venture capital have climbed to 16% of deals as private valuations finally adjust to market realities

• Evergreen Growth: Semi-liquid fund structures are rapidly expanding as private wealth channels accelerate adoption of private assets

By The Numbers

• 18.2%: Current effective US tariff rate, up from 2.4% in January 2025

• 15.9%: Distribution yield for private equity as a share of beginning NAV, near historical lows

• $3.4 trillion: Aggregate unicorn post-money valuation with 809 active companies

• 35%: Share of PE portfolio companies held for at least five years, up from historical norms

• $1.1 trillion: Projected wealth-focused evergreen fund assets under management by 2029

Key Trends to Watch

• Artificial Intelligence continues as the standout venture theme, with AI startups consistently outpacing non-AI peers in valuation growth across all funding stages.

• Secondary Markets are experiencing record transaction volumes as extended holding periods drive demand for liquidity solutions, with GP-led deals reaching $71 billion in 2024.

• Direct Lending has captured nearly half of new buyout deals despite pricing premiums, though borrowers are beginning to favor syndicated markets as cost sensitivity increases.

• Infrastructure Investment is surging past natural resources as LPs allocate to specialist managers positioned for decarbonization and AI-driven data center demand.

The Wrap

The private markets industry faces a complex crossroads where supportive macroeconomic fundamentals clash with policy-driven uncertainty. While AI investment and evergreen fund growth provide bright spots, the prolonged exit environment and tariff disruptions suggest 2025 may mark a reset year rather than the anticipated recovery. Success will increasingly depend on manager selectivity and structural innovation rather than broad market momentum.