Canada’s Strategic Pivot Toward China

Canada’s landmark trade deal with China lowers tariffs on Chinese EVs and Canadian agricultural exports, signaling a diversification away from US reliance. This recalibration aims to unlock $3 billion in exports but risks US retaliation and complicates future North American trade negotiations.

US-China Trade Truce and Tariffs

The recent US-China trade truce has led to reduced tariffs and eased tensions, supporting a 2.4% US growth forecast for 2026. This stabilization benefits global supply chains and trade flows, yet ongoing rivalry and policy unpredictability remain significant risks for international businesses.

Semiconductor Sector Under Geopolitical Pressure

South Korea’s semiconductor industry faces mounting pressure from US industrial policy, including demands for increased US-based production and threats of tariffs. This creates strategic dilemmas for Korean firms, affecting global supply chains and technology investment decisions.

US–Taiwan tech security partnerships

Deepening cooperation on AI, drones, critical minerals, and supply-chain security signals a shift toward ‘trusted networks’. Companies may gain market access and certification pathways, but face stricter due diligence on China exposure, data governance, and third-country joint projects.

Financial fragmentation and crypto rails

Russia-linked actors are expanding alternative payment channels, including ruble-linked crypto instruments and third-country gateways, while EU/UK target crypto platforms to close circumvention. For businesses, settlement risk rises: blocked transfers, enhanced KYC/AML scrutiny, and sudden counterparty de-risking by banks and exchanges.

Semiconductor supercycle and capacity

AI-driven memory demand is lifting Samsung Electronics and SK hynix earnings and prompting large 2026 capex. Tight supply and sharply rising DRAM contract prices could raise input costs for global electronics, while boosting Korea’s export revenues and supplier investment opportunities across equipment and materials.

Freight rail recovery, lingering constraints

Rail performance is improving, supporting commodities exports; Richards Bay coal exports rose ~11% in 2025 to over 57Mt as corridors stabilised. Yet derailments, security incidents, rolling-stock shortages and infrastructure limits persist, elevating logistics risk for bulk and containerised supply chains.

Competitive Dynamics and Asian Market Pressure

French and European battery firms face increasing competition from Asian manufacturers, especially Chinese players with aggressive expansion and lower costs. This dynamic is reshaping supply chains, pricing, and strategic alliances in the second-life battery sector.

Infrastructure Investment and Modernization

Private investment in infrastructure has surged, with R382.5 billion committed in 2025, but public sector investment lags. Major projects in digital networks, ports, and logistics are underway, yet persistent bottlenecks and underinvestment threaten supply chain efficiency and export competitiveness.

Robust Non-Oil Growth Bolsters Economic Outlook

Saudi Arabia’s GDP grew 4.5% in 2025, with non-oil sectors expanding 4.9%. Sustained growth in non-hydrocarbon industries is enhancing economic resilience, supporting demand for international goods and services, and diversifying the Kingdom’s role in global supply chains.

Trade politics: EU–Mercosur backlash

French farmer protests are fueling resistance to the EU–Mercosur deal, increasing ratification delays and safeguard demands. For multinationals, this raises uncertainty for agri-food sourcing, automotive and chemicals exports, and access to South American critical minerals.

Trade Diversification and New Markets

With exports to the US and China declining, Germany is actively pursuing trade agreements with India, Mexico, Australia, and the UAE. This diversification aims to reduce reliance on traditional markets, mitigate geopolitical risks, and unlock new growth opportunities for German exporters.

Labor Market Aging and Reform Debates

The employment rate for Koreans aged 55-64 exceeded 70%, intensifying debates over raising the retirement age and reforming labor policies. These demographic shifts affect workforce availability, productivity, and long-term business planning, especially in manufacturing and services.

Maritime regulation and Jones Act rigidity

Court affirmation and continued political support for the Jones Act sustain high domestic coastal shipping costs and limited capacity for inter-U.S. moves. Energy, agriculture, and construction inputs may face higher delivered costs, affecting project economics and intra-U.S. supply-chain design.

Electric Vehicle Market Disruption

Reduced tariffs allow up to 49,000 Chinese EVs annually into Canada at 6.1%, boosting affordable options and competition. This move could reshape the auto sector, attract Chinese investment, and challenge domestic manufacturers, while provoking US concerns over supply chain security and market share.

Crime, corruption and governance strain

Allegations of syndicate infiltration and corruption within policing and procurement elevate security, extortion, and compliance risks for investors. Weak enforcement can disrupt logistics corridors and construction sites, raise insurance costs, and complicate due diligence and partner selection.

Limited Public Support and Social Acceptance

The Shelter Act lacks robust government support programs or tax incentives, leading to public debate over cost allocation. This could influence market sentiment, consumer demand, and the political sustainability of the shelter construction mandate.

Volatile tariff regime and litigation

U.S. tariffs are shifting via exemptions, court challenges and congressional maneuvering, complicating pricing and customs planning. Forecast U.S. container imports fall 2% in H1 2026, with March down 12% year-on-year amid uncertainty over tariff legality and scope.

Export Controls and Technology Sanctions

US-led export controls on advanced chips and technology, especially targeting China, place Taiwan at the heart of global supply chain tensions. Compliance risks, supply bottlenecks, and retaliatory measures from China complicate operations for multinationals relying on Taiwanese tech.

Global Trade Diversification Strategies

Amid US-EU tensions, the UK and EU are accelerating trade talks with partners like China, India, and Mercosur. Diversifying trade relationships is seen as essential to mitigating risks from US protectionism and ensuring long-term resilience in UK supply chains and export markets.

AI and Technology Regulation Leadership

Canada is advancing AI and digital regulation to build trust, attract investment, and protect privacy. With over 3,000 AI firms and 800,000 digital sector jobs, legislative clarity and sovereign infrastructure are central to economic resilience and international tech partnerships.

State-ownership shift and privatization pipeline

Cairo is signaling greater private-sector space via the State Ownership Policy, IPO/asset-sale plans, and “Golden License” fast-tracking. Opportunities are rising in ports, logistics, manufacturing, and services, but execution risk persists around valuation, governance, and military/state-linked competition in key sectors.

Debt Management and Fiscal Sustainability Challenges

Egypt’s reliance on local and international debt issuance remains high, with EGP 843 billion in local debt planned for February 2025 and $2 billion in international bonds for FY 2025/26. Fiscal sustainability concerns persist, influencing sovereign risk and borrowing costs.

Trade Diversification Amid US Tariffs

Facing 50% US tariffs, India has accelerated trade agreements with the EU, UK, Oman, and New Zealand. This strategic pivot reduces dependence on the US, hedges against protectionism, and opens new markets for labor-intensive and technology-driven exports.

Suez Canal Disruptions Impact Trade

The Gaza conflict caused Egypt to lose $9 billion in Suez Canal revenue over two years, disrupting global shipping and supply chains. Recovery is underway, but ongoing regional instability remains a risk for trade flows and foreign exchange earnings.

Defense Build-Up and Asymmetric Deterrence

Taiwan is investing $40 billion in drones, AI-based defense systems, and advanced weaponry to counter China’s military threat. This defense modernization, heavily reliant on US support, is integral to business risk assessments and supply chain continuity planning.

China Relations and Supply Chain Diversification

Although overshadowed by US tensions, South Korea’s trade and supply chain strategies remain sensitive to China’s economic policies and regional dynamics. Ongoing diversification efforts are crucial for risk mitigation, especially in electronics, automotive, and critical materials sourcing.

UK–EU border frictions endure

Post‑Brexit customs and SPS requirements, the Border Target Operating Model, and Northern Ireland arrangements continue to reshape UK–EU flows. Firms face documentation risk, delays, and higher logistics overheads, driving route diversification, inventory buffers, and reconfiguration of distribution hubs serving EU markets.

EV policy reset and incentives

Canada scrapped the 2035 100% ZEV sales mandate, shifting to tighter tailpipe/fleet emissions standards plus renewed EV rebates (C$2.3B over five years) and charging funding (C$1.5B). Automakers gain flexibility; investors must reassess demand forecasts and compliance-credit markets.

AI regulation and compliance burden

China is expanding AI governance via draft laws and sector rules, emphasizing safety, content controls, and data governance. Foreign firms deploying AI or integrating Chinese models face product localization, auditability demands, and higher legal exposure around censorship and algorithm accountability.

Carbon Market Regulation and Opportunities

Brazil is preparing to launch a regulated carbon credit market by 2030, unlocking significant investment in forest conservation, renewable energy, and agriculture. This regulatory shift will drive demand for carbon credits, impacting polluting industries and boosting international climate finance flows.

Energy grid strikes, blackouts

Mass drone and missile attacks are degrading generation, substations and high-voltage lines, triggering nationwide emergency outages and nuclear output reductions. Winter power deficits raise operating downtime, raise input costs, complicate warehousing and cold-chain logistics, and heighten force-majeure risk.

Infrastructure Modernization Drive

The UK is accelerating infrastructure investment, focusing on energy grid modernization, renewables, and transport. The National Wealth Fund prioritizes sectors like carbon capture and hydrogen, presenting opportunities and challenges for investors and operators.

Impact on Real Estate Investment Strategies

The Shelter Act changes the risk-reward calculus for real estate investors, with higher costs and longer project cycles. Institutional investors are expected to focus on finished or near-finished assets, while speculative and early-stage investments become less attractive due to regulatory uncertainty.

Regulatory and Policy Shifts for Business

Japan is implementing regulatory reforms to attract foreign investment and enhance business resilience. Policy changes in economic security, industrial strategy, and trade are designed to support supply chain diversification, technological innovation, and long-term competitiveness for international firms.

Landmark India-EU Free Trade Agreement

India’s comprehensive FTA with the EU, concluded in January 2026, eliminates tariffs on 90% of Indian exports and expands market access for goods and services. This deal will significantly boost bilateral trade, attract FDI, and enhance supply chain resilience, positioning India as a key alternative to China.