Carlyle CEO Harvey Schwartz on Navigating Tariffs and Client Sentiment

Navigating Policy Uncertainty

• 💡 The year began with strong pro-growth expectations, but tariff policy introduced significant confusion and uncertainty, marking a dramatic policy shift.
• ⚠️ This situation is distinct from past financial stress periods like '28, '29, or '47, as it stems from a unique policy initiative.

Impact on Portfolio Companies

• 🎯 Companies impacted by tariffs are not necessarily halting imports or adopting overly conservative stances.
• ⚖️ The response is tactical and strategic, depending on a company's relative competitive position, scale, and financial flexibility.
• 🚀 Companies with scale and flexibility may choose to lean in and gain market share even in tariff-affected sectors.
• 🛡️ Financially fragile companies are leaning towards protecting capital and ensuring maximum financial flexibility.

Client Engagement and Capital Deployment

• 💬 Despite uncertainty, many CEOs express they are 'open for business' and want to engage.
• ⏳ There is a hesitation to rush to deploy capital, with a focus on managing inventory and client relationships.
• 📈 The risk premium is higher due to increased uncertainty, but there's a desire to put capital to work.
• 💰 Carlyle, with over $80 billion in dry powder, is actively seeking opportunities while acknowledging the higher risk premium.