Mission Grey Daily Brief - November 01, 2024
Summary of the Global Situation for Businesses and Investors
The 2024 US presidential election is gripping the world's attention and could have a significant impact on the global economy. The Russian President Vladimir Putin is taking advantage of a distracted and divided United States to push for pro-Kremlin electoral outcomes in Georgia and Moldova and bring North Korean soldiers to Russia to fight Ukraine. China's military incursions into Taiwan's ADIZ and crossings of the median line in the Taiwan Strait have skyrocketed, creating a dangerous new normal. China has imposed sanctions on the US drone supplier to Ukraine, Skydio, banning Chinese companies from providing critical components to the firm. Attackers set fire to the headquarters of a Bangladesh party that supported the country's ousted leader Sheikh Hasina on Thursday night. US airstrikes targeted multiple sites in Syria, killing up to 35 Islamic State militants. The UN General Assembly has condemned the US economic embargo of Cuba for a 32nd year.
US Presidential Election
The 2024 US presidential election is gripping the world's attention and could have a significant impact on the global economy. The vote, held on 5 November, could also have major consequences on international issues ranging from the climate crisis to the reorientation of global supply chains. The Republican candidate is former President Donald Trump and the Democratic candidate is current Vice President Kamala Harris. In China, where election news is filtered through heavily censored state and social media, the focus has been more on spectacle than substance – with a sense that no matter who wins, the tensions of the US-China relationship will remain. People in China have seen their economic prospects dim as the country has struggled to fully rebound following its stringent pandemic controls amid a wider slowdown and property market crisis, among other challenges. Interest in the candidates and their policies appears muted compared with past US elections.
Russia-Ukraine War
The Russian President Vladimir Putin is taking advantage of a distracted and divided United States to push for pro-Kremlin electoral outcomes in Georgia and Moldova and bring North Korean soldiers to Russia to fight Ukraine. New NATO Secretary General Mark Rutte confirmed this week that North Korean military units have been deployed to Russia’s Kursk region for potential battle with Ukrainian troops, who have seized territory there. Pentagon officials estimate that as many as ten thousand North Korean soldiers have been sent to Russia for military training, among them the country’s elite special forces. Even as Russia escalates militarily against Ukraine, it has deployed disinformation, influence operations, and money in Moldova and Georgia, working to turn back pro-Western majorities in both countries that favour eventual integration into the European Union (EU) and other Western institutions.
China-Taiwan Tensions
China's military incursions into Taiwan's ADIZ and crossings of the median line in the Taiwan Strait have skyrocketed, creating a dangerous new normal. Crossings of the median line have become increasingly common since August 2022, when then-House Speaker Nancy Pelosi controversially visited Taiwan, and China has been steadily erasing it altogether. In a recent drill surrounding Taiwan, 111 Chinese warplanes crossed it, marking a single-day high. A nation's ADIZ extends far beyond its territorial airspace, but the area is closely monitored for national security purposes. When Chinese aircraft enter Taiwan's de facto ADIZ, it dispatches combat air patrol (CAP) aircraft in response. In 2021, the Chinese military flew 972 aircraft into Taiwan's ADIZ, and that number nearly doubled in 2022. 1,703 aircraft were recorded in 2023. And 2024 looks to have a record-breaking number, with over 2,000 aircraft documented as of September. They're also no longer limited to a corner of the ADIZ.
China Sanctions US Drone Supplier to Ukraine
China has imposed sanctions on the US drone supplier to Ukraine, Skydio, banning Chinese companies from providing critical components to the firm. Skydio is currently looking for alternative suppliers because of the sanctions, which have also blocked the supply of batteries from the company's sole supplier. The company has asked the Biden administration for help. US officials are concerned that China could undermine US supply chains and make it harder to supply drones used for intelligence gathering in Ukraine. Skydio's crisis highlights the risks faced by US companies dependent on China and comes as foreign businesses worry about China's use of security laws to detain local workers and conduct corporate raids. On 11 October, China imposed sanctions on several US companies, including Skydio which is a private company, in response to Washington's approval of the sale of combat drones to Taiwan. Skydio was recently awarded a contract with Taiwan’s National Fire Agency. The sanctions were imposed before Skydio could find alternative suppliers. One of the sources said that the Chinese authorities had visited Skydio's suppliers, including Dongguan Poweramp, a subsidiary of Japan's TDK that makes batteries for drones, and ordered them to stop working with Skydio. On 30 October, Skydio notified its customers that it was limiting the number of batteries it ships with its drones due to Chinese sanctions and warned that new suppliers are not expected to come on stream until spring. Skydio is discussing the situation with companies in Asia, particularly in Taiwan. One source said that US officials had reached out to Asian allies to discuss ways to support the company. Skydio has also been in contact with Taiwan's Vice President Hsiao Bi-khim on the issue. The San Mateo-based company serves corporate and government clients, including the US military. It said it has sent more than 1,000 drones to Ukraine to gather intelligence and help record Russia's war crimes. Skydio said its newest model, the X10, was the first US drone to pass Ukraine's electronic warfare tests, which makes it harder to jam, and Kyiv has ordered thousands of such drones. China's actions come as the US Congress is considering a bill to ban Americans from using drones made by DJI, the Chinese company that dominates the global commercial drone market.
Further Reading:
Americans are going to the polls. Here’s how the US election works - World Economic Forum
China imposes sanctions on US drone supplier to Ukraine - Ukrainska Pravda
China’s watching the US election – but doesn’t see much hope for better ties - CNN
Luxembourg grain company still profiting despite Ukraine war - Luxembourg Times
Putin is making the most of a distracted and divided United States - Atlantic Council
UN General Assembly condemns the US economic embargo of Cuba for a 32nd year - Toronto Star
Themes around the World:
US tariff dispute escalates
Brazil faces combined US tariffs of 25% and 12.5% on part of exports, with Brasília launching reciprocity proceedings and WTO consultations. The measures affect US$5.8 billion of exports, raising uncertainty for manufacturers, importers, contracts and bilateral supply planning.
Financial fragmentation challenges open economy
Coverage warns that fragmentation of global payments and trade blocs could weigh on Israel’s export-oriented, technology-heavy economy. As sanctions intensify and alternative payment networks expand, firms may face higher transaction friction, banking scrutiny, and sovereign-risk sensitivity in capital markets.
India-SACU trade talks revive
India and SACU have restarted preferential trade negotiations covering market access, customs procedures and rules of origin. For South Africa, the talks could reshape tariffs on autos, pharmaceuticals and machinery while improving critical-mineral export access and regional supply-chain positioning.
Gas storage vulnerability grows
Germany’s gas storage was reported at just 47% of capacity in August, the lowest on record, despite holding over 20% of EU storage capacity. Berlin’s reluctance to mandate emergency purchases increases winter supply, price and cross-border spillover risks for energy-intensive manufacturers and logistics networks.
US tariff shock intensifies
Failed negotiations with Washington triggered 50% US tariffs on roughly $20-28 billion of Canadian goods, with Canada pledging dollar-for-dollar retaliation. The escalation raises cross-border costs, disrupts North American sourcing, and forces exporters to reassess market exposure, pricing, and contract terms.
Myanmar energy and Dawei revived
Thailand and Myanmar are reviving discussion of the Dawei Special Economic Zone, deep-sea port and expanded energy cooperation, including natural gas and power networks. These projects could reshape regional industrial and shipping routes, but sanctions, financing constraints and Myanmar’s conflict sharply limit bankable progress.
Energy Costs Pressure Industry
Recent reporting ties public anger to high electricity bills, fuel prices and independent power producer contracts, with calls to reopen or terminate agreements. Persistently elevated energy costs and policy uncertainty increase manufacturing overheads, weaken export competitiveness and complicate long-term investment planning.
Settlement Policy Raises Sanctions
Israel’s advance of the E1 settlement project has triggered warnings of legal and reputational consequences from European governments, while the UK is considering measures to ban trade with Israeli settlements. Businesses face mounting sanctions, market-access, and ESG-related exposure tied to West Bank activity.
SADC trade integration push
South Africa’s SADC chairship is centered on lifting intra-regional trade from about 20% to 50%. Faster regional integration, reduced non-tariff barriers and better border management would materially influence cross-border distribution, market access and production-network strategies for international firms.
Energy Security Through Middle East
Japan has intensified diplomacy and stockpiling as more than 95% of crude imports transit Hormuz, with disruptions and Houthi attacks elevating supply risk. Companies face higher energy costs, transport uncertainty, and stronger incentives to diversify sourcing, inventories, and shipping exposure.
Australia economic resilience partnership
Vietnam and Australia agreed deeper cooperation on critical minerals, semiconductors, clean energy, digital infrastructure, and foreign investment screening. With bilateral trade around US$14 billion, the partnership supports diversification, supply-chain resilience, and new opportunities for cross-border industrial and technology projects.
US regulation disputes hit business climate
American officials and lawmakers are increasingly criticizing South Korean regulation of U.S.-linked technology and digital firms, including actions involving Coupang and platform rules. This adds legal and reputational risk to the operating environment and could complicate wider trade and investment negotiations.
Election Uncertainty Raises Policy Risk
The presidential race is amplifying fiscal and regulatory uncertainty as leading candidates clash over debt, pensions, EU contributions and trade rules. Investors are preparing for months of volatility, with some scenarios pointing to sharper policy breaks after April-May 2027.
Hormuz disruption threatens Britain
Reporting on prolonged Strait of Hormuz disruption indicated severe downside risks for the UK economy, including EY projections of 6.4% inflation by Christmas and GDP contraction of 0.2% by mid-2027 under extended closure, pressuring energy-intensive sectors and import costs.
Industrial competitiveness under pressure
Germany’s industrial competitiveness is deteriorating structurally, with 25.4% of manufacturers reporting concern outside the EU and only 5.2% seeing improvement. Pressure is strongest in autos, metals, chemicals and machinery, signaling weaker export positioning, margin compression, and tougher investment decisions for multinational operators.
U.S. Tariff Shock Escalates
Canada-U.S. trade talks collapsed, triggering 50% U.S. tariffs on roughly $20-28 billion of Canadian goods and prompting dollar-for-dollar retaliation. The escalation raises cross-border costs, disrupts integrated supply chains, and complicates pricing, sourcing, and market access decisions for exporters and investors.
Regional Energy Export Ambitions
Turkey is increasing electricity and gas exports to Syria, planning a 500-megawatt Birecik-Aleppo transmission link, and studying a 100-kilometer pipeline to Northern Cyprus. These projects broaden cross-border commercial opportunities but embed operations more deeply in regional geopolitical risk.
Yen Volatility and Rate Hikes
The yen has hovered near 160 per dollar despite rare U.S.-Japan intervention, while markets price an 80%–90% chance of a September BOJ hike. Currency swings are raising import costs, complicating hedging, financing, pricing, and Japan market entry decisions for multinationals.
Industrial Overcapacity Scrutiny Rising
Chinese industrial overcapacity has become a central trigger for new trade action, especially in sectors such as autos, solar panels, steel, and cement. Greater foreign scrutiny could accelerate anti-dumping measures, local-content rules, and diversification away from China-centered manufacturing platforms.
China-Japan dialogue remains fragile
Japanese lawmakers’ planned Beijing visit and China’s approval of a new Chongqing envoy suggest crisis-management efforts, not normalization. Commercial channels may reopen selectively, but persistent tensions over Taiwan, export controls and detentions mean investors should expect unstable regulatory and diplomatic conditions.
Aranceles sectoriales de Estados Unidos
México sigue presionando para reducir aranceles de 25% a automóviles y 50% a acero, mientras alrededor de 85% de sus exportaciones a EE.UU. mantiene trato preferencial. La persistencia de gravámenes sectoriales afecta márgenes, inversión manufacturera y decisiones de localización.
CPTPP gains not automatic
New data showed UK-Malaysia trade rose 5.0% to £6.4 billion after tariff-free access, but UK exports fell 2.0% to £3.5 billion while imports jumped 14.8%. The evidence suggests trade agreements alone may not translate into export growth without market localization.
Recovery Remains Investment Fragile
Germany’s economy grew 0.2% quarter on quarter in Q2, but private investment remains weak: equipment investment has contracted since summer 2023 and private construction is nearly 20% below early-2021 levels. This limits confidence in a durable business recovery.
Government support cushions affected sectors
Ottawa signaled additional aid for workers and businesses, building on nearly $25 billion of support over 18 months. Existing measures include a $1 billion BDC loan program and $100 million for domestic steel transport, partially mitigating liquidity and logistics pressures.
US-China tariff truce fragility
Washington is preparing a 7.5% Section 301 tariff on Chinese goods, potentially lifting effective second-term tariffs to about 20% before the September 24 Xi-Trump summit and November 10 truce deadline, raising uncertainty for cross-border sourcing, pricing, and investment planning.
Modern Slavery Rules Tighten
Australia is strengthening accountability for supply-chain modern slavery, including potential criminal penalties for companies with revenue above A$100 million that fail to prevent abuses abroad. This increases compliance costs but also pressures suppliers, importers, and multinational procurement systems to upgrade traceability.
US tariff and transshipment scrutiny
Thailand faces rising trade risk after being flagged in a White House transshipment report tied to China-linked supply chains, while Bangkok seeks to keep US tariff rates below 19%. Exporters warn the designation could undermine confidence in Thai shipments and compliance costs.
Extreme weather disrupts agriculture
Heatwaves, wildfires, and one of the worst droughts on record are damaging harvests, raising demands for state aid, and increasing the risk of food-price inflation. These climate shocks threaten agricultural output, rural incomes, insurance costs, and supply-chain reliability across food-related industries.
Negotiated US trade reset
An 80-minute Lula-Trump call reopened direct talks, with technical meetings to follow and discussion of product exemptions. This creates near-term volatility but also potential relief for exposed sectors, making tariff scenario planning and customer diversification essential for exporters and investors.
House Vote Timing Matters
The sanctions bill still faces key hurdles in the US House, including recess timing, diplomatic sensitivities and opposition to expanded presidential tariff powers. This delays clarity but prolongs uncertainty, forcing businesses to scenario-plan for multiple India-US trade outcomes.
Rare earth export leverage
China’s suspended rare earth controls may return after November 10, while narrower restrictions already target US and EU entities. With China holding roughly 75% of mining and 85% of processing, automaking, defense and electronics supply chains remain highly exposed.
Defense rearmament boosts industry
France updated its 2024-2030 military law with €36 billion extra, lifting total defense credits to about €436 billion. Priorities include drones, munitions, air defense and cyber, creating procurement opportunities while potentially tightening industrial capacity and component availability elsewhere.
Further escalation threatens trade channels
Washington is considering tougher steps including aviation sanctions, secondary tariffs and even a land blockade involving neighboring states. Though not yet enacted, these options signal possible disruption to overland trade, air cargo, import flows and third-country business exposure.
Sanctions evasion through shadow fleets
Russian energy trade continues to rely heavily on shadow-fleet tankers, ship-to-ship transfers and obscured cargo routing, particularly for crude, LNG and refined products, heightening due-diligence burdens, sanctions exposure, insurance complications, and reputational risk for counterparties and service providers.
Shadow fleet maritime enforcement
Britain defended seizing the Russian-linked tanker Smyrtos after a Royal Marines boarding, signalling tougher enforcement against sanctions evasion. Shipping, insurers and port operators face higher legal, operational and reputational exposure linked to Russian-origin energy cargoes.
China remains critical oil buyer
Despite heavier US pressure, China still absorbs the vast majority of Iran’s shipped oil, with estimates above 80% in 2025 and volumes still substantial in 2026. This keeps Iran’s export lifeline alive while exposing refiners, traders, banks and shippers to sanctions escalation.