Tax Base Expansion Pressure

Authorities are preparing sizeable new revenue measures, with reports of over Rs400 billion in additional steps and tougher agricultural, retail and provincial taxation. Businesses should expect stronger enforcement, digital audits, reduced exemptions, and rising formalization pressure across sectors.

Nearshoring frenado por cuellos

México sigue atrayendo manufactura relocalizada y captó más de US$40.000 millones de IED en 2025, pero inseguridad, burocracia, escasez eléctrica, falta de agua y lentitud regulatoria están retrasando expansiones y reduciendo la conversión de anuncios en producción efectiva.

US Trade Pressure Escalates

Rising US scrutiny over tariffs, forced-labor exposure, trade imbalances and intellectual property could raise costs for Vietnam-based exporters. With Vietnam deeply tied to the US market, additional duties would reshape sourcing decisions, margin assumptions and investment planning for manufacturers.

Policy Volatility Around Strategic Sectors

High-level diplomacy with Washington and Beijing is increasing policy uncertainty across autos, chips, shipbuilding, and investment. Korean firms face fast-changing rules on tariffs, subsidies, investigations, and overseas investment commitments, requiring tighter scenario planning for cross-border operations and capital allocation.

Labour Shortages and SME Strain

Tight labour markets and 2026 spring wage hikes averaging 5.26% are supporting demand but squeezing smaller firms. Japan’s demographic pressures, staffing shortages and weak SME pricing power are raising operational costs, constraining suppliers and increasing the risk of consolidation or business exits.

Cybersecurity compliance pressure rising

France recorded 6,167 data-breach notifications in 2025, up 9.5% year on year, with hacking behind roughly half. The CNIL plans tougher inspections and sanctions in 2026, increasing compliance, vendor-management and operational-resilience demands for firms handling large datasets.

War Damage to Energy Infrastructure

Ukrainian drone strikes continue to hit refineries, terminals, and export infrastructure, cutting output and refined-product shipments even when revenues hold up. This raises operational volatility for commodity buyers, shipping operators, and industrial consumers relying on Russian-origin or Russia-linked energy flows.

Budget Deficit and War Spending

Russia’s federal deficit reached 5.9 trillion rubles, or 2.5% of GDP, in the first four months, already above plan. Defense-driven spending and 41% higher state procurement distort demand, crowd out civilian sectors, and heighten tax, inflation, and payment risks.

Forestry and Permit Enforcement Risks

Stricter forestry enforcement and suspensions of large projects, including China-linked hydropower investments, underscore land-use and environmental compliance risk. Large penalties, including reported fines of US$180 million, may delay industrial, energy, and infrastructure projects in resource-rich areas critical to export operations.

US Tariffs Reconfigure Trade

US tariff barriers are eroding Korea-US FTA advantages, lifting Korea’s effective tariff burden on US exports from 0.2% to 8% between January 2025 and March 2026. This is redirecting trade flows, especially toward China, and complicating market access planning.

Logistics and Input Cost Exposure

Importers and manufacturers remain vulnerable to cost swings from tariff changes, customs disputes, energy-market shocks, and sensitive shipping inputs. Even without major port disruption headlines, supply-chain planning in the US requires greater inventory flexibility, dual sourcing, and margin protection mechanisms.

Escalating sanctions and enforcement

EU’s 20th sanctions package broadened restrictions across energy, finance, shipping and crypto, while targeting circumvention hubs and 60 entities. Compliance costs, payment friction and legal exposure are rising for firms using Russian counterparties or intermediary routes.

Tourism Policy and Mobility Reset

Thailand is rolling back its 60-day visa-free regime, reverting many visitors to 30-day access after authorities linked longer stays to crime, scams, and illegal business activity. The move tightens compliance risks for travel-linked sectors while potentially dampening tourism recovery momentum.

Export-Led Growth Imbalance

China’s near-term industrial resilience is being driven mainly by exports rather than domestic demand. April exports rose 14.1% year on year, while construction and consumer conditions stayed weak, increasing exposure to external demand shocks, overcapacity disputes, and aggressive export competition in global markets.

Shadow Fleet Sustains Oil Exports

Despite tighter enforcement, Iran continues using ship-to-ship transfers, dark-fleet tankers, AIS manipulation and relabelling to move crude toward Asian buyers, especially China. This keeps legal, insurance, ESG and maritime safety risks elevated for refiners, traders, ports, and service providers.

Energy Revenues Despite Restrictions

Russia’s April oil and fossil export earnings remained elevated despite lower volumes, supported by high global prices. This preserves state revenue and market influence, but leaves buyers, traders, and insurers exposed to abrupt policy changes, waiver expiries, and price-cap enforcement shifts.

Trade Exposure to US-EU Tariff Frictions

France remains exposed to renewed transatlantic trade volatility as Washington threatens 25% tariffs on EU cars, breaching the prior 15% arrangement. Escalation would hurt French exporters, automotive supply chains and broader investment decisions already strained by geopolitical uncertainty and compliance risks.

Judicial Reform and Legal Certainty

Institutional uncertainty remains a material investor concern as the government revisits parts of judicial reform after controversy over judge elections and weak turnout. Businesses face persistent questions over contract enforcement, dispute resolution, and the broader reliability of Mexico’s legal environment.

US Tariff Dispute Escalation

Washington and Brasília set a 30-day working group to resolve Section 301 trade tensions, with potential new U.S. tariffs still looming. Exposure spans steel, aluminum, ethanol, digital trade and timber, raising uncertainty for exporters, investors and cross-border sourcing decisions.

State-Backed Strategic Investment Push

The new Canada Strong Fund, seeded with $25 billion over three years, signals a more activist industrial policy. Expected co-investment in clean energy, fossil fuels, transport, telecoms, advanced manufacturing and critical minerals could redirect foreign capital toward nationally prioritized sectors.

Border Trade Route Volatility

Thailand’s trade with neighboring countries is weakening even as transit trade to third countries surges. March border trade with neighbors fell 21.6%, while third-country border trade rose 41.4%, reflecting shifting routes, electronics flows and heightened logistics planning requirements for cross-border operators.

USMCA Review and Tariff Uncertainty

Mexico’s top business risk is the prolonged USMCA review, with Washington signaling tariffs will remain and rules of origin will tighten. The pact underpins roughly US$2.5 billion in daily border trade, shaping automotive, metals, agriculture, and cross-border investment decisions.

Strong shekel shifts financial conditions

The shekel has strengthened to about 2.90 per dollar, its strongest level since 1993, helping restrain inflation. The Bank of Israel kept rates at 4% but still sees up to two cuts, affecting hedging, pricing and capital allocation decisions.

US-China Managed Trade Friction

Washington and Beijing have stabilized ties only superficially through new trade and investment boards, while tariffs, Section 301 risk, export controls, and rare-earth leverage remain unresolved. Firms should expect continued managed friction rather than normalization across bilateral trade and supply chains.

Yen Weakness and BOJ Tightrope

A weaker yen, tested near the 160 per dollar level, is amplifying imported inflation and hedging costs for foreign businesses. Meanwhile, the Bank of Japan faces a narrow path between rate increases, slowing growth and fiscal stress, heightening currency and financing volatility.

Tariff Policy Volatility Persists

US tariff policy remains unusually unpredictable after court rulings struck down earlier measures and the administration shifted to new legal pathways. The average effective US tariff rate reached 11.8% from 2.5% in early 2025, complicating landed-cost forecasting, contract structuring, and inventory planning.

Currency Collapse and Inflation

Macroeconomic instability is severe, with estimated inflation at 73.5%, food prices up 115%, and the rial weakening to roughly 1.9 million per US dollar. Extreme price volatility erodes consumer demand, distorts procurement, and makes budgeting, pricing, and wage management highly unreliable.

Tech Investment Faces Caution

Israel’s innovation economy remains structurally strong, but conflict risk, reserve mobilization, and global investor sensitivity are encouraging more selective capital deployment. International firms may continue prioritizing cybersecurity and defense-adjacent segments while delaying broader venture, hiring, or expansion decisions.

Budget Stalemate and Fiscal Squeeze

France faces elevated fiscal and political risk as 2027 budget passage looks uncertain ahead of presidential elections. Officials warn a rollover budget could disrupt tax indexation, weaken demand, delay spending decisions, and complicate investment planning amid deficit reduction pressures.

EU Meat Access Under Pressure

The EU’s move to suspend Brazilian animal-product exports over antimicrobial compliance risks removing a premium market just as China tightens quotas. The episode underscores regulatory vulnerability, strengthens demand for integrated traceability, and raises compliance costs for food exporters and investors.

Port Incentives Support Transit Trade

Mawani extended a 15-day storage-fee exemption for transit cargo at Dammam, Yanbu Commercial, Yanbu Industrial, and NEOM ports. The measure strengthens Saudi port competitiveness, supports trade flow diversification, and offers shippers incremental cost savings on selected non-container cargo.

Infrastructure Spending and Execution Gap

Germany has launched a €500 billion infrastructure and climate-neutrality fund, targeting rail, bridges and broader modernization. For investors and suppliers, the opportunity is substantial, but execution risks remain high due to coalition friction, administrative delays, and procurement bottlenecks.

Acceleration of Foreign Investment

Saudi Arabia continues to liberalize market entry, allowing 100% foreign ownership in most sectors and faster digital licensing. Active investment licenses rose from 6,000 in 2019 to 62,000 by end-2025, improving opportunities for international entrants despite execution complexity.

Migration Reforms Target Skill Gaps

The government will keep permanent migration at 185,000 places, with more than 70% for skilled entrants, while spending A$85.2 million on faster trade-skills recognition. Businesses should benefit from quicker labor access, though lower net migration may still tighten workforce availability.

Ports Expansion and Logistics

The planned Tecon Santos 10 terminal would require over R$6 billion and increase Santos container capacity by 50%, but auction redesign and delays may push delivery into 2026 or 2027. Until capacity improves, congestion risk and logistics costs remain important business constraints.

Selective U.S. Tariff Relief Benefits

The U.S. is implementing non-semiconductor Section 232 concessions for Taiwan, improving competitiveness for auto parts, wood products, and some aircraft components. Average duties on affected auto parts fall from roughly 26.7% to 15%, supporting export diversification and deeper Taiwan-U.S. industrial linkages.