Tariffs, uncertainty may squeeze Wall Street bonus pay

Wall Street’s dimmed hopes about the Trump administration have dashed projections for banker bonuses in 2025.

Incentive compensation for some investment bankers could fall by as much as 20% in 2025, according to a report from the compensation consulting firm Johnson Associates, as the banks’ corporate clients hit pause on major strategic moves amid geopolitical uncertainty and market volatility.

The report estimates that incentive pay for Wall Street employees across major banks will fall by 13% from 2021 — steeper than the projected declines at insurance companies, private equity firms, wealth managers and hedge funds. Those figures could change throughout the year, as policies on interest rates and trade continue to evolve.

“Tariffs and geopolitical concern are [the] biggest wildcard,” the report said.

The incentive pay cuts on Wall Street could be especially stark after a high-flying 2024. Last year set a record for incentive pay in New York City’s securities industry, per a report from New York State Comptroller Thomas DiNapoli.

Last year’s bonus pool was up by more than one-third from the prior year, at $47.5 billion, marking the largest total pot since at least 1987. The average bonus paid in 2024 was $244,700, which marked the first major bump since 2021.

In 2025, slow merger and acquisition activity and the pausing of initial public offerings will dampen advisory fees and equity underwriting revenues, Johnson Associates predicts. Employees across corporate staff, advisory units, equity underwriting and retail and commercial teams could see their incentive pay drop 5% to 20%, the report found.

But the damage won’t be even across different lines of business. The disruption of global trade patterns could mean opportunities for banks to finance solutions that arise from tariffs, said Pierre Buhler, managing director in the financial services practice of consulting firm SSA, in a recent interview.

Equities and fixed income trading desks could see their volumes surge amid market turbulence. The Johnson Associates report estimates those jobs may see incentive pay tick up by 10% to 25%. Debt issuance might also trend higher, leading to a 5% to 15% rise in pay for debt underwriters, per the report.

During the first quarter, which ended March 31, trading desks at the country’s largest banks beat estimates nearly across the board. But since President Donald Trump announced his tariff policies in early April, bank executives’ rosy outlooks have darkened.

JPMorgan Chase , Bank of America, Morgan Stanley and Goldman Sachs all reported record stock trading activity in the first quarter, but executives at those banks expressed caution during their first-quarter calls last month due to the roller coaster trade policies.

Goldman Sachs’ first quarter was its best ever for revenue from stock traders. But overall investment-banking revenue was down 8% from the prior year, as tepid M&A continued to tamp down growth.

“Our clients, including corporate CEOs and institutional investors, are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions,” said CEO David Solomon on the company’s first-quarter earnings call.

Citi’s investment bankers saw revenue rise 12% in the first quarter. The bank stuck to previously announced 2026 profitability targets, but CEO Jane Fraser said on the company’s earnings call that the bank may have to pull different levers to get there.

“In periods of stress, we have shown that we are a port during the storm for our clients, the global markets and the economy — and this time is no different. We are ready to lean in,” Fraser said.