Critical Inputs Protectionism Expanding

The administration is preparing Section 232 action on polysilicon, including tariffs and a possible price floor, to counter China’s 93.5% global production share. This could strengthen domestic resilience but raise costs for U.S. solar developers, chip manufacturers, and downstream investors.

Trade collapse with key partners

Several reports indicate Iran’s trade has contracted sharply under renewed conflict and maritime restrictions, including major declines with China, the EU, India, and Gulf partners. Businesses face shrinking market access, disrupted import channels, and weaker demand across Iran-linked regional commercial networks.

Fiscal uncertainty under new government

Andy Burnham’s arrival has sharpened scrutiny of taxation, spending, nationalisation and infrastructure financing. Investors are monitoring whether fiscal rules hold as borrowing needs rise, because any increase in gilt issuance or policy reversals could affect sterling, financing costs and broader business confidence.

Railway build-out reshapes logistics

Both governments agreed to accelerate phase one of the China-Thailand railway and define phase two implementation, with Thailand targeting completion around 2030. The project could materially alter inland freight flows, cross-border sourcing patterns and industrial location decisions for exporters.

China Ties Deepen Investment

Thailand and China signed cooperation agreements spanning trade, customs, AI, aviation and intellectual property, while Thai officials discussed more than 70 billion baht of Chinese investment in precision industries and advanced technology, reinforcing Thailand’s role in regional manufacturing, EV and technology supply chains.

Grain export capacity erosion

Ukraine has lost about one-third of its Black Sea grain export capacity, with monthly seaborne shipments falling from roughly 6 million to 4 million tonnes. Four of 13 major terminals reportedly stopped purchases, constraining harvest evacuation and foreign-exchange earnings.

China competition hardens stance

During Franco-German talks, leaders criticized China’s overcapacity, undervalued currency and state support, with Macron citing Europe’s €1 billion-a-day trade deficit. This signals firmer French backing for protective trade measures affecting sourcing, industrial competition and market access strategies.

US tariff shock escalates

Washington imposed new Section 301 tariffs of 12.5% on Israeli imports, the maximum tier applied to 38 economies, citing weak forced-labor import controls. The move raises export costs, complicates US market access, and heightens compliance pressure across Israeli supply chains.

Iran Conflict Disrupts Shipping

U.S. strikes on Iran continued for nearly two weeks as Washington sought to restore shipping through the Strait of Hormuz. Reported increases in crude, jet fuel, and fertilizer costs raise freight, input, and insurance expenses for globally exposed U.S. businesses.

Political dysfunction dents investor confidence

Domestic political strains, bureaucratic inefficiency, and corruption allegations are undermining confidence in policy execution. Analysts say reactive stimulus measures are failing to address weak productivity and declining competitiveness, raising implementation risk for investors, exporters, and regulated industries.

US Tariffs Hit Exports

Washington imposed 12.5% tariffs on Australian goods over alleged forced-labor controls, prompting Canberra to seek reversal. The move risks raising costs, weakening bilateral trade flows, and increasing compliance scrutiny across exporters’ supply chains and sourcing documentation.

Critical mineral export rules

Jakarta is revising rules on rare earth element content in exported minerals after regulatory confusion delayed shipments. With 85 surveyor reports approved and exports restarting, the government is trying to restore legal certainty for miners, traders, and downstream processing investors.

Tight Monetary Policy Persists

Turkey’s central bank kept the one-week repo rate at 37%, with overnight lending at 40% and borrowing at 35.5%, signaling prolonged restrictive conditions as energy-price pressures and geopolitical uncertainty threaten temporary inflation reacceleration and higher financing costs.

Treasury market spillover risks

Washington’s participation reflected concern that unilateral yen defense could force Japan to sell US Treasuries; Japan holds over $1.1 trillion to $1.203 trillion in US government debt. Cross-border bond volatility could tighten global liquidity and affect funding conditions for internationally exposed firms.

Trade dispute targets digital policy

The US investigation underpinning the 25% tariff cited Brazilian policies on digital trade, Pix payments, intellectual property, ethanol access, anti-corruption rules and illegal deforestation, signaling broader regulatory friction that could affect technology, payments, compliance and foreign-investor risk assessments.

Fuel pricing and import costs

Higher oil and gas prices are pressuring Egypt’s external balance and inflation outlook. The IMF estimates that every $10 increase in international oil prices could widen the fiscal deficit by about 0.3% of GDP, affecting energy-intensive operations.

Hormuz fee regime uncertainty

Iran-Oman talks on future Strait management remain unsettled, with Iran reportedly seeking transit charges of 5%–7% of cargo value, Oman discussing about 3%, and the US insisting on free passage, leaving shipping contracts, voyage economics and route planning highly uncertain.

Auto rules tighten sharply

Washington is pressing for tougher automotive rules of origin and potentially 50% U.S. content in North American vehicles. That would disrupt deeply integrated regional manufacturing, force supplier reconfiguration, and raise compliance costs for automakers, parts makers and logistics providers operating in Mexico.

Massive US-bound investment push

South Korea is moving to implement a $350 billion investment commitment in the United States, with early projects expected in shipbuilding and energy. Funding structure, execution pace, and political oversight will influence capital allocation, cross-border partnerships, and supply-chain localization decisions.

Tariffs increasingly weaponize geopolitics

Congress is advancing Russia-Iran sanctions legislation that would authorize tariffs up to 100% on major buyers of Russian energy and 500% on Russian imports. This would extend U.S. trade pressure into third-country commerce, increasing geopolitical exposure for firms with cross-border energy and commodity links.

Buy British procurement expansion

The Chancellor is pushing a cross-government ‘Buy British’ procurement model after 86% of 1,200 major defence contracts reportedly went to UK firms. International suppliers may face tighter localisation expectations, while domestic content, apprenticeships, and regional footprint become more important in public tenders.

India FTA talks accelerate

India and Israel are preparing a second round of free trade agreement negotiations after initial talks covered goods, services, customs, investment, IP, and technology sectors. With bilateral merchandise trade at $3.62 billion in FY25, firms could gain improved market access.

India FTA Talks Advance

India and Israel completed a second FTA negotiating round covering goods, services, customs, technical barriers and intellectual property. With merchandise trade at $3.93 billion in 2025-26, progress could improve market access and diversify Israeli trade links toward Asia.

Vietnam gains China-plus-one inflows

Recent reporting highlights Vietnam as a leading Southeast Asian beneficiary of production and investment diversifying away from China. Its proximity to southern China, lower labor costs, and wide FTA network continue to attract manufacturing, especially for export-oriented multinational supply chains.

Russian oil dependence risk

India’s energy-security strategy has become a major commercial vulnerability as Russian crude reportedly exceeded 40% of imports in May 2026. Any disruption from US sanctions, waiver changes or shipping instability would raise input costs, inflation and refining uncertainty.

EU Solidarity Lanes Expansion

Ukraine and EU partners are expanding Solidarity Lanes and Danube logistics to offset maritime disruption. These routes already handle around 70% of imports and 80% of non-agricultural exports, but require infrastructure upgrades, faster border processing, and stronger regional coordination.

Reconstruction and EU Connectivity

Beyond emergency trade support, Solidarity Lanes are laying foundations for longer-term EU market integration and reconstruction. Since 2022 they enabled trade worth about EUR 296 billion, reinforcing the business case for continued investment in border, rail, customs, and logistics infrastructure.

EU Funding Tied Reforms

Ukraine must complete 25 reforms to unlock over €10 billion in EU support, including prosecutor selection, SME insolvency procedures, SOE oversight, and judicial IT upgrades, making reform execution a key determinant of fiscal support, governance quality, and investment attractiveness.

Municipal Funding Enforcement Shock

Treasury’s withholding of roughly R13 billion from 69 municipalities, later conditionally released, exposed acute local-governance risk. For investors and operators, the episode signals persistent uncertainty around municipal service continuity, contractor payments, urban operations and fiscal enforcement in major metros.

Alternative export logistics turn complex

Saudi efforts to bypass disrupted chokepoints increasingly rely on layered workarounds involving the Suez Canal, Egypt’s SUMED pipeline, and tanker shuttling. Capacity constraints—SUMED at about 2.5 million barrels daily—make exports more expensive, operationally complex, and less predictable for buyers.

Energy Security Crisis and Monetary Tightening

The US-Iran war has disrupted Hormuz Strait oil flows, spiking global energy prices. MAS tightened monetary policy twice in three months to combat imported inflation. Electricity prices rose 17% to historic highs, increasing business operating costs across sectors.

Tighter screening of foreign investment

France lowered the review threshold for non-EU investors in sensitive listed companies from 25% to 10%, covering firms listed outside the EU. Faster 10-day decisions may preserve financing access, but cross-border M&A in defense, AI, semiconductors and infrastructure now faces higher scrutiny.

Water infrastructure reform accelerates

The National Water Action Plan introduces licensing standards, municipal intervention powers, anti-corruption measures, and about R24 billion a year for water and sanitation projects. With roughly half of treated water reportedly lost, execution will materially affect industrial continuity and operating costs.

Negotiation uncertainty over transit

Disputes over future management of the Strait of Hormuz, including permits, insurance approval, and possible tolling arrangements, remain unresolved despite mediation. This legal and regulatory uncertainty complicates voyage planning, contract pricing, and long-term investment decisions for shipping and energy market participants.

Tariff Authority Faces Legal

Recent tariff actions are being challenged on constitutional and statutory grounds after the Supreme Court struck down earlier broad levies. Legal uncertainty increases the risk of abrupt policy reversals, delayed contracting, refund claims, and volatile pricing for cross-border commercial flows.

Nuclear revival reshapes energy strategy

Middle East energy insecurity is pushing Japan back toward nuclear expansion, with a 2040 target for nuclear to supply 20% of generation and at least five new reactors implied. This supports long-term power resilience, industrial planning, and energy-sector investment.