Bonuses on Wall Street could plunge by as much as 20% as dealmaking dries up and the stock market whipsaws because of economic turmoil caused by President Donald Trump’s trade war, according to a top consultancy.
Johnson Associates, a compensation specialist, said deals have all but ground to a halt over Trump’s threats to slap stiff tariffs on imported goods.
In its latest outlook report released Thursday, the firm predicted a 10% cut to bonuses for investment bankers as “expected M&A ‘mania’ disappoints with economic uncertainty” over the looming heavy levies.
“Bankers are concerned and afraid of paralysis where client activity freezes up and companies don’t invest, buy or sell, and the firms don’t generate the fees that they depend on. That is the biggest fear right now,” Alan Johnson, the firm’s founder, told The Post.
“The longer the uncertainty lasts, the more significant the impact.”
Johnson Associates warned that financiers working in equity underwriting, bankers who help companies sell stock to investors, could see a 20% decline in bonuses.
Hedge fund and asset management executives are likely to see their incentives slide by up to 10%, the report added.
Trump’s so-called Liberation Day announcement on April 2 roiled markets worldwide after the commander-in-chief laid out a string of “reciprocal tariffs” on nations that he felt treated the US unfairly.
He has paused the reciprocal tariffs, which were set to kick in April 9, on all countries except China for 90 days as the administration tries to hammer out deals with global trade partners.
But the uncertainty has forced corporations to pull back on M&A activity, the bread and butter that seals megabucks payouts and advisory fees.
It is a swift reversal from last year, when dealmaking had roared back to life as the world emerged from the economic fallout of the Covid-19 pandemic.
The number of mergers and acquisitions announced across the world — an indicator of global economic health — fell in April to the lowest level in more than 20 years, according to Dealogic data.
In the US, the world’s largest M&A market, there were just 555 deals signed last month, the lowest number for any month since May 2009 during the global financial crisis, the data showed.
The Johnson report did predict that there would be some on Wall Street who could benefit from the roiled markets. The volatility has boosted the profits of trading desks at major US banks as investors reorder their portfolios to weather the potential forthcoming economic storms.
Johnson said that could drive bonuses for equity traders up between 15% and 25%, while their fixed-income counterparts could see a bump of 10% to 20%.
Last year, Wall Street bonuses swelled, with the total pool for payouts hitting a record $47.5 billion as industry profits soared, according to a report by New York State Comptroller Thomas DiNapoli.
That report said the average annual bonus rose by almost a third, with payouts climbing to a whopping $244,700.
