Autos and Industrial Base Pressure

Tariffs and CUSMA tensions are intensifying pressure on Canada’s auto and broader manufacturing base, including steel, lumber, and machinery. Businesses face margin compression, relocation risk, and weakened long-term confidence as North American production rules and industrial policy become more politicized.

China-Centric Oil Export Dependence

China remains the dominant buyer of Iranian crude, reportedly taking around 1.4-1.6 million barrels per day through teapot refiners, yuan payments, and shadow logistics. This concentration sustains Iran’s revenues but increases geopolitical exposure for energy traders and sanctions-sensitive counterparties.

War Spillover Disrupts Operations

Fragile Gaza ceasefire talks, periodic strikes, and recent conflict with Iran keep Israel’s risk environment elevated. Businesses face interruption risks across staffing, insurance, site security, and planning, while any ceasefire breakdown could quickly tighten transport, energy, and cross-border operating conditions.

Automotive Investment Repositioning

South Africa’s automotive sector is being reshaped by localisation incentives and new entrants. Mahindra is assessing CKD expansion near Durban, while EV production enjoys a 150% investment allowance, creating opportunities but also intensifying competition from Chinese and Indian manufacturers.

Weak Growth and Demand Risks

UK growth expectations are softening as energy shocks and tight financial conditions weigh on activity. Official and think-tank forecasts point to roughly 0.8% to 0.9% growth, with rising unemployment risk, implying weaker domestic demand and more cautious corporate expansion decisions.

Agriculture Input Vulnerability

Fertiliser shortages and higher input prices are creating acute risk for Thailand’s farm sector and food exports. Officials are seeking 1-2 million tonnes of Russian urea, while research suggests cost shocks could reduce output by 21% and farmer incomes by 19%.

Electronics Supply Chain Deepening

Bac Ninh and other northern hubs are consolidating as major electronics and semiconductor ecosystems, backed by Samsung, Foxconn, Amkor, and Korean investment. However, competition for orders, engineers, and supplier positions is intensifying, increasing labor-market tightness and capability requirements for local partners.

Oil Storage Production Squeeze

Iran’s crude storage capacity is nearing exhaustion, with estimates of only 12 to 22 days remaining and exports down about 70% from March levels. Forced shut-ins could damage aging wells, reduce future output, and further tighten fiscal and foreign-exchange conditions.

Export Ecommerce Policy Opening

India is considering allowing foreign-owned inventory-based ecommerce models for exports only, with strict warehousing and tracking safeguards. If implemented, the measure could widen SME export access, accelerate cross-border fulfilment investment and reshape logistics, compliance and digital trade operations.

Semiconductor Controls and Decoupling

U.S. legislation and allied export controls are tightening pressure on China’s chip sector, while Beijing mandates at least 50% domestic equipment for new capacity and excludes foreign AI chips from state-backed data centers, accelerating bifurcated technology ecosystems and supplier displacement.

USMCA Rules Tightening Risk

The July USMCA review is becoming a major operational variable, with US officials discussing stricter rules of origin and retaining some sectoral tariffs. North American manufacturers face renewed compliance burdens, sourcing adjustments, and investment uncertainty, especially in autos and metals.

Semiconductor Concentration Drives Exposure

Taiwan remains central to advanced chip production, supplying more than 90% of leading-edge semiconductors. TSMC reported record first-quarter profit of T$572.5 billion and raised guidance, but overseas expansion and export-control tensions are reshaping investment geography, customer strategies, and supply-chain contingency planning.

War Economy Slowing Domestic Growth

Russia’s central bank cut rates to 14.5% but still expects only 0.5%-1.5% growth in 2026 after early-year contraction. High borrowing costs, fiscal strain and inflation constrain investment planning, weaken consumer demand and increase uncertainty for foreign firms with remaining operational exposure.

US-China Tech Controls Escalate

The United States is tightening technology restrictions on China through export controls, chip-equipment legislation, and shifting licensing rules, while Beijing weighs countermeasures in semiconductors, solar equipment, and critical minerals. Multinationals face rising compliance burdens, supplier concentration risks, and potential disruption across electronics, energy, and advanced manufacturing.

Nearshoring Accelerates to Mexico

U.S. trade policy is accelerating nearshoring and regionalization, especially toward Mexico and North America. Logistics firms report rising cross-border demand, more use of bonded and Foreign Trade Zone facilities, and redesign of distribution networks as companies seek resilience against policy and sourcing shocks.

Imported Inflation and Wage Pass-Through

A weak yen is feeding imported inflation in food and energy while wage growth momentum continues. Businesses face rising labor and input costs, pressuring margins, contract pricing, and consumer demand assumptions across manufacturing, retail, and services sectors.

Digital Trade Regulatory Friction

India-US negotiations explicitly cover digital trade, underscoring persistent uncertainty around data governance, platform regulation, and cross-border digital market access. Multinationals in technology, e-commerce, and services should expect continued compliance adaptation as India balances openness with strategic regulation.

Power Supply Stabilises, Market Opens

Electricity reliability has improved sharply, with over 340 days without loadshedding, a 6GW winter surplus, and Eskom’s energy availability factor rising to about 65.35% from 54.55% in FY2023. This lowers operational disruption risk, while ongoing market reforms create private-energy opportunities.

Slowing Growth and Public Investment

Mexico’s economy expanded only about 0.8% in 2025, while public investment reportedly fell 28%, pointing to weaker domestic demand and infrastructure constraints. Slower growth can moderate consumer markets, delay logistics upgrades, and reduce confidence in medium-term expansion plans.

War Risk Insurance Expands Logistics

New public-backed insurance and reinsurance mechanisms are beginning to cover transport risks including war, terrorism, sabotage, and confiscation. This reduces a major barrier for logistics operators, lowers entry friction for foreign carriers, and could gradually restore cross-border trade and reconstruction activity.

Yen Volatility and Intervention

Japan intervened as the yen neared 160 per dollar, with the currency briefly strengthening about 3%. Continued volatility affects import costs, exporter margins, hedging expenses, and pricing decisions for international firms operating or sourcing from Japan.

US-China Strategic Frictions Deepen

Commercial relations with China remain constrained by unresolved disputes over tariffs, export controls, rare earths, technology access, and Iran-related tensions. This raises exposure for firms dependent on Chinese inputs, cross-border e-commerce, semiconductors, and politically sensitive supply chains serving both markets.

Nearshoring Meets Infrastructure Constraints

Nearshoring remains a structural opportunity, with Mexico attracting more than $40 billion in FDI in 2025 and trilateral trade reaching $1.9 trillion in 2024. Yet industrial parks, power, water, and logistics bottlenecks increasingly constrain execution and site-selection decisions.

Fuel Security and Import Dependence

Middle East disruption and Strait of Hormuz risks exposed Australia’s reliance on imported refined fuels, with roughly 80% imported and reserves near 37 days. Businesses face higher freight, energy and fertilizer costs, while government diplomacy seeks supply assurances from Asian partners.

Semiconductor Capacity and SEZs

India notified its first chip fabrication SEZ for Tata Semiconductor in Gujarat with planned investment of ₹91,000 crore and 21,000 jobs. Revised SEZ rules and additional approved projects for Micron and others improve long-term prospects for local chip packaging, testing, and import substitution.

Sanctions Expand Secondary Exposure

Washington is widening Iran-related secondary sanctions to banks, shippers, refiners, and intermediaries, including entities in China, Hong Kong, the UAE, and Oman. Companies now face higher compliance, shipping, insurance, and payment risks if counterparties touch sanctioned energy or logistics networks.

Drone Attacks Disrupt Export Infrastructure

Ukrainian strikes on Novorossiysk, Primorsk, Ust-Luga, refineries and related assets are disrupting core export routes. Novorossiysk normally handles roughly 25-35% of crude exports, while April output reportedly fell 300,000-400,000 bpd, increasing logistics uncertainty and force majeure risk.

Fiscal Reform and Infrastructure Push

Berlin is pairing weak growth with a large reform agenda, including a €500 billion infrastructure fund, debt-brake changes and prospective tax relief. If implemented efficiently, this could support construction, defense, transport and digital sectors, though execution risks remain significant.

US Tensions Threaten Market Access

Relations with Washington have deteriorated, with reports of a 30% US tariff on South African goods and continued scrutiny of AGOA preferences. For exporters in agriculture, autos, and manufacturing, the risk is reduced market access and greater policy uncertainty.

Nickel Pricing and Downstream Squeeze

Indonesia’s revised nickel benchmark formula, effective 15 April, raises ore reference prices by 100–140% in some cases and increases smelter costs, especially for HPAL plants. This supports miners and royalties but pressures EV battery supply chains, margins, and project economics.

Semiconductor Concentration and Expansion

TSMC’s record Q1 revenue reached NT$1.1341 trillion and profit NT$572.4 billion, with AI demand driving over 30% projected full-year dollar revenue growth. Taiwan remains central to advanced chip supply, but overseas fab expansion is gradually redistributing production, investment, and geopolitical leverage.

Balochistan Security Threats Persist

Escalating insurgent violence in Balochistan is undermining confidence in mining, infrastructure and corridor projects. Attacks affecting Gwadar and the Reko Diq area raise operating and insurance risks for foreign investors, especially in critical minerals, logistics and China-linked industrial zones.

Labor Costs and Regulatory Volatility

Employers report 67% of firms do not plan new hiring and 50% lack five-year expansion plans, citing global uncertainty and repeated labor-rule changes. High severance and unit labor costs versus Vietnam and Cambodia risk diverting labor-intensive manufacturing and supply-chain relocation.

Energy Security and LNG Costs

Record LNG imports underscore rising power-demand pressure and energy cost risk. Vietnam imported roughly 276,000 tonnes in April, more than double a year earlier, as hotter weather and global supply disruptions lifted prices, affecting industrial operating costs, power planning and investment economics.

China Dependence Trade Imbalance

China has overtaken the US as India’s largest trading partner, underscoring persistent import dependence despite diversification ambitions. Bilateral trade reached about $151.1 billion in FY2025-26, with India’s deficit widening to $112.16 billion, exposing manufacturers and supply chains to concentrated external risk.

Fuel Import Vulnerability Intensifies

Australia remains highly exposed to external fuel shocks as import dependence stays extreme and refining capacity remains limited. Recent disruptions forced emergency diesel procurement from Brunei and South Korea, underscoring risks to transport, mining, aviation, agriculture and manufacturing operations.