Inflation, FX and financing conditions

Inflation accelerated to about 3.35% y/y in February, with oil-price shocks raising downside risks for the dong and interest rates. Vietnam’s central bank signals flexible management. Importers and leveraged investors should tighten FX hedging, working-capital planning, and pricing clauses.

Monetary policy constrained by risk

The Bank of Israel held rates at 4% citing increased risk premium despite inflation easing into target. Elevated geopolitical uncertainty can keep financing costs higher for longer, influence credit spreads, and add volatility to the shekel—affecting pricing, hedging, and M&A valuations.

Green hydrogen export ecosystem emerging

NEOM’s green hydrogen project, reported as a ~$8.4bn build with 2026 operational targets, underpins Saudi ambitions in clean-energy exports. For industry, it signals future demand for renewable EPC, electrolyzers, ports and offtake contracts, alongside evolving standards, certification and procurement localization.

Geoeconomic bloc politics with China

US-led ‘economic security’ clubs—especially critical minerals—pressure Australia to align with tariff-enabled frameworks while China remains its largest export market. Firms face higher policy volatility, potential retaliatory trade friction, and the need to diversify routes and customers.

Digital economy regulation and AI

Australia’s copyright, data and AI policy settings are in flux as global AI firms expand locally and lobby for clearer licensing models. Outcomes will affect cloud/data-centre investment, IP compliance costs, and cross-border data governance for multinationals operating in Australia.

Industrial incentives, WTO scrutiny

PLI/industrial policy is deepening local manufacturing and exports (₹2.16 lakh crore investment; ₹8.3 lakh crore exports), but faces rising trade-law friction. China has triggered a WTO dispute over domestic content-linked incentives in batteries, autos and EVs.

EU tech regulation and platform governance

Macron’s push for ‘transparent algorithms’ reinforces France’s hard line on EU digital rules (GDPR, DSA, DMA) amid transatlantic friction. Tech, e-commerce, and advertisers should expect higher compliance burdens, auditability demands, and enforcement attention affecting data, content, and competition.

US tariff deal implementation risk

Korea’s October tariff deal cut U.S. duties from 25% to 15% in exchange for a $350bn Korea investment pledge, but legislative delays keep re-escalation risk alive. Sectoral tariffs (autos, steel, semis, pharma) remain a key downside for exporters.

Currency stability and tighter finance

Bank Indonesia is prioritizing rupiah stability over growth, holding the policy rate around 4.75% and signaling sizable FX intervention amid foreign outflows and rating/market concerns. Higher funding costs and volatility affect capex timing, import pricing, hedging, and repatriation strategies.

Logistics chokepoints and Transnet fragility

Ports and rail constraints remain a binding growth and export risk. Treasury flags Transnet’s weak cash position despite lower losses, while infrastructure funding targets key coal and iron‑ore corridors. Persistent congestion raises costs, delays shipments, and reshapes supply-chain routing.

Russia sanctions and enforcement intensification

The UK rolled out its largest Russia sanctions package since 2022, targeting Transneft, 48 shadow-fleet tankers and 175 2Rivers-linked companies, pushing total designations above 3,000. Firms must strengthen screening, shipping due diligence, finance controls, and re-export risk management.

EU gas exit and volatility

Despite continued EU purchases of Russian LNG in the billions of euros, Europe is moving toward a full ban on Russian pipeline gas and LNG by 2027. Firms should plan for abrupt contract and price shifts, infrastructure bottlenecks, and renewed competition for alternative LNG supply.

Salvaguardas e reciprocidade comercial

O governo brasileiro prepara decreto de salvaguardas ligado ao acordo Mercosul–UE, reagindo a mecanismos europeus para produtos sensíveis. Isso pode introduzir instrumentos mais rápidos de defesa comercial e maior incerteza tarifária setorial, afetando planejamento de importadores, exportadores e investimentos industriais.

USMCA review and tariff risk

Bilateral Mexico–U.S. talks start March 16 ahead of the 2026 USMCA review, with Washington pushing tighter rules of origin, anti-transshipment measures and supply-chain security. Remaining tariffs (e.g., 50% metals; 17% tomatoes) raise planning uncertainty.

Customs reform raises compliance costs

Mexico’s 2025–26 customs reform makes brokers jointly liable with traders, triggering higher fees, heavier documentation demands and service pullbacks for risky goods. Concurrent digital migration has caused border delays (e.g., Nuevo Laredo, Mexicali), increasing dwell time and working capital.

Tax reform push and VAT changes

A sweeping FY2026/27 package targets simplification, stronger compliance and faster VAT refunds, alongside property-tax reforms and expanded e-filing. While intended to rebuild trust, changes can alter effective tax burdens and cash flow, especially for VAT-intensive manufacturers, logistics, and services firms.

Anti-dumping and trade remedies

Australia is expanding anti-dumping actions, including preliminary duties such as ~37% on Chinese hot-rolled coil and other steel products. While protecting domestic producers, these measures raise input costs for construction/manufacturing and can trigger partner retaliation risk.

Nova reforma tributária do consumo

A transição para CBS e IBS entra em fase operacional em 2026, exigindo mudanças em faturamento, apuração e sistemas ERP, mesmo antes da vigência plena. A incerteza de regras infralegais e créditos pode afetar precificação, estrutura de cadeias e decisões de localização e investimentos.

Escalating sanctions and enforcement

EU and UK continue widening Russia measures, targeting banks, ports and third‑country facilitators; new packages aim to close loopholes in shipping, crypto and re-exports. Compliance costs rise sharply, with higher secondary‑sanctions exposure for traders, insurers, banks and logistics providers.

Semiconductor Geopolitics And Re‑shoring

Semiconductors dominate Taiwan’s US exports (about 76%). Commitments to invest ~US$250bn in US chip/AI/energy capacity reduce tariff risk but accelerate supply-chain redistribution, IP/security compliance demands, and potential margin pressure for Taiwan-based fabs and suppliers.

Foreign investment screening intensifies

CFIUS scrutiny and sectoral industrial-policy priorities are raising execution risk for cross-border M&A, minority stakes, and greenfield projects in sensitive technologies and infrastructure. Longer timelines, mitigation agreements, and potential deal abandonments impact capital allocation and market-entry strategies.

Defense industry expansion and scrutiny

Record defense exports and rapid scaling of production create opportunities in procurement, components, and co-development. However, customers and suppliers must manage tighter export licensing, reputational exposure, and potential contract disruptions tied to battlefield events and coalition politics.

Strategic investment and outbound capital

A new Korea–U.S. strategic investment vehicle and project-selection team will steer large greenfield investments (power grids, gas, shipbuilding) with disclosure and parliamentary oversight. This creates opportunities for EPC, finance, and insurers, but adds governance, timing, and political-conditionality risk.

Sector tariffs via Section 232

National-security tariffs remain a durable lever, including reported rates such as 50% steel/aluminum and 25% autos/parts, plus other targeted categories. Sector-focused duties distort competitiveness, encourage regionalization, and complicate rules-of-origin, customs valuation, and transfer pricing.

China dependency and pricing pressure

Iran is heavily dependent on China as the buyer of over 80% of its seaborne crude, largely to Shandong teapot refiners constrained by quotas and margins. Competition from discounted Russian barrels forces deeper Iranian discounts, increasing revenue volatility and counterparty risk for Iran-linked deals.

Tariff volatility and legal risk

Supreme Court limits emergency-tariff authority, but the administration is pursuing temporary Section 122 duties (10% rising to 15%) and fresh Section 301/232 probes. Companies face price shocks, contract renegotiations, customs reclassification and accelerated supply-chain diversification decisions.

Monetary easing amid cost pressures

Inflation has eased (around 1.8% y/y recently), reopening space for Bank of Israel rate cuts and cheaper credit. However, currency swings, housing/rent pressures, and war-related fiscal demands can reprice funding, wages, and contract terms for foreign investors.

Electricity tariff overhaul and costs

Proposed power tariff restructuring aims to cut cross-subsidies (~Rs102bn) and contain circular debt, potentially lifting inflation by ~1.1pp while reducing industrial tariffs 13–15%. Higher fixed charges and net-metering changes create cost volatility for factories, data centers, and retailers.

Acordo Mercosul–UE em implementação

A ratificação no Congresso e a aplicação provisória na UE aceleram cortes tarifários: Mercosul zera 91% das tarifas em até 15 anos e UE 95% em até 12. Abre oportunidades industriais e impõe requisitos ambientais, sanitários e salvaguardas agrícolas.

USMCA review and tariff volatility

The July USMCA review and shifting U.S. tariff tools (Section 232, temporary surcharges) keep market access uncertain. Firms must tighten rules-of-origin compliance, scenario-plan for treaty fragmentation, and reassess pricing, contracts, and plant footprints tied to U.S. demand.

U.S. tariffs and legal whiplash

U.S. courts curtailed emergency-power tariffs, but Washington is rebuilding tariff tools (Section 122/232/301) while keeping steel, aluminum, autos and lumber duties. Canadian firms must model rapid duty changes, refunds, pricing resets, and cross-border compliance costs.

China trade coercion de-risking

Korea remains highly exposed to China demand and potential coercive measures, while aligning with US-led “economic security” on critical minerals and technology. Businesses should diversify end-markets, audit China-linked revenue concentration, and plan for sudden customs or licensing frictions.

Supply-chain infrastructure and labor fragility

Business continuity risks persist across rail, ports, and trucking corridors that underpin Canada’s trade flows. Any disruptions—labor disputes, extreme weather, or capacity bottlenecks—can quickly propagate into cross-border manufacturing and retail inventories, increasing the value of redundancy and nearshoring.

EU Trade-Defense and EV Tariffs

EU trade defenses are tightening, but with flexibility: Volkswagen’s China-built Cupra Tavascan received a tariff exemption via minimum import price and quota, avoiding a 20.7% duty. Firms must plan for contingent duties, undertakings, and potential retaliation affecting cross-border EV supply chains.

Rare earths and critical minerals

China’s dominance (~70% mining, ~90% processing) and tighter export licensing keep rare earths a geopolitical lever. Buyers in EVs, wind, defense face supply disruption and price volatility, accelerating diversification, stockpiling, and alternative pricing benchmarks outside China.

Import inflation and food security

Higher oil/shipping costs and a weaker pound threaten pass-through to food and medicines in an import-reliant economy. Government highlights multi-month strategic reserves and increased wheat procurement targets, but businesses face price controls, margin pressure, and demand shifts.