Mission Grey Daily Brief - November 10, 2024
Summary of the Global Situation for Businesses and Investors
The world is bracing for another series of shocks as Donald Trump is set to assume office in January following his election victory. Trump's return to power has heartened some of America's long-time rivals, particularly Moscow, while worrying many of its friends. Instead of seeing peace on the horizon, a world already in turmoil is preparing for another series of shocks. Trump's proposed economic policies, including a 60% tariff on Chinese imports and a 10% tariff on all U.S. imports, are expected to have broad economic implications for China and Taiwan, respectively. Trump's win has also boosted the chances of Netanyahu remaining in power until Israel's 2026 elections. In Ukraine, there are fears that Trump plans to force a peace deal on Kyiv by cutting off the flow of U.S. military aid. Trump's victory has also sparked uncertainty over how long Western support for Ukraine will continue, with Hungary's leader predicting that a new U.S. administration under Trump will cease providing support to Ukraine.
Trump's Tariff Bombshell: Implications for China and Taiwan
U.S. President-elect Donald Trump's proposed economic policies include a 60% tariff on Chinese imports and a 10% tariff on all U.S. imports. These policies are expected to have broad economic implications for China and Taiwan, respectively. Taiwan's Economics Minister Kuo Jyh-huei has outlined plans to help companies shift production and minimize the impact on Taiwan's critical tech and electronics sectors. Taiwan's government is preparing policies to support companies looking to diversify their supply chains and adapt to shifting trade policies. Taiwan, whose firms have invested heavily in China over the past four decades, is closely watching how these tariffs could affect Taiwanese companies that have historically relied on China's lower production costs.
Japan's Military Buildup and Alliance with the U.S.
Japan's Prime Minister Shigeru Ishiba has renewed a pledge to build up Japan's military and deepen its alliance with the U.S. under President-elect Donald Trump. Ishiba cited escalating tensions with China, Russia, and North Korea as reasons for strengthening Japan's military power. He also pledged to pursue the ongoing military buildup plan under the 2022 security strategy, which calls for a counter-strike capability with long-range cruise missiles, a break from Japan's self-defence only principle. Ishiba's governing coalition, however, lost a recent parliamentary election, which could make it difficult to pursue his party's planned policies and budget plans in the coming months.
Western Parts Found in Russian Weapons
Ukraine has found Western-made parts inside the wreckage of a new heavy Russian combat drone that crashed last month. Ukraine's military intelligence agency said that an analysis of the S-70 Okhotnik, or "Hunter," drone that was downed over eastern Ukraine in early October, revealed components made by companies in the U.S. and Europe. Officials found microelectronics and other technological components inside the wrecked drone made by U.S.-based companies Analog Devices, Texas Instruments, and Xilinx-AMD, as well as Infineon Technologies in Germany and STMicroelectronics in Switzerland. Ukraine uploaded purported evidence of the Western-made parts to a government portal, where several other companies were listed. Business Insider reached out to the companies mentioned in the HUR's statement and received a response from four of them. Infineon, ST, Texas Instruments, and Analog said that since the start of the Ukraine war in 2022, they have taken steps to prevent their technologies from falling into Russia's hands in violation of sanctions and export control measures. The recent find marks the latest discovery of Western-made components inside Russian weapons, despite widespread international sanctions aimed at curbing Moscow's war efforts.
Syrian Refugees Returning to Syria
Hundreds of thousands of Syrian refugees have returned to their country since Israel launched a massive aerial bombardment on wide swathes of Lebanon in September. Many who fled to Lebanon after the war in Syria started in 2011 did not want to go back. But for officials in Lebanon, the influx of returnees comes as a silver lining to the war between Israel and Hezbollah that has killed more than 3,000 people and displaced some 1.2 million in Lebanon. Some in Syria hope the returning refugees could lead to more international assistance and relief from western sanctions. Lebanon's caretaker Minister of Social Affairs Hector Hajjar told Russia's Sputnik News last month that the war in Lebanon could yield “a positive benefit, an opportunity to return a large number of displaced Syrians to their country, because the situation there is now better than here." Political leaders in Lebanon, which was hosting an estimated 1.5 million Syrian refugees before the recent wave of returns, have been calling for years for the displaced to go home, and many don't want the refugees to return.
Further Reading:
Newspaper headlines: US economy 'overheating' and 'Ukraine fears' - BBC.com
US to send contactors to Ukraine to repair, maintain US weapons - VOA Asia
Themes around the World:
Critical minerals alliance reshaping
Canberra’s A$1.2bn Critical Minerals Strategic Reserve (initially gallium, antimony, rare earths) and deeper US-led cooperation (price floors, offtakes) are accelerating non‑China supply chains, creating investment openings but higher compliance, geopolitical and pricing-policy risk for manufacturers.
Critical Minerals and Resource Security
The US government’s $2.5 billion push for domestic critical mineral production is reshaping investment in mining and advanced manufacturing. New contracts and legislation aim to reduce import dependency, enhance national security, and support resilient supply chains.
IMF-linked reforms and fiscal tightening
Ongoing engagement with the IMF and multilaterals supports macro stabilization but implies subsidy reforms, tax enforcement, and constrained public spending. These measures affect consumer demand, project pipelines, and pricing. Investors should track review milestones that can unlock financing and market confidence.
China trade ties and coercion
China remains Australia’s dominant trading partner, but flashpoints—such as Beijing’s warnings over the Chinese-held Darwin Port lease and prior export controls on inputs like gallium—keep coercion risk elevated, complicating contract certainty, market access, and contingency planning for exporters and import-dependent firms.
Digital infrastructure and data centers
A proposed 20-year tax holiday plus GST/input relief aims to attract foreign data-center and cloud investment, targeting fivefold capacity growth to 8GW by 2030. Multinationals face opportunities in AI/5G ecosystems alongside evolving localization, energy and permitting constraints.
Critical minerals export controls
China’s expanding controls on dual-use goods and critical minerals (rare earths, gallium) and licensing slowdowns—seen in Japan-related restrictions and buyers diversifying to Kazakhstan—create acute input risk for semiconductors, EVs, aerospace, and defense-linked manufacturing worldwide.
Supply Chain Resilience and Diversification
South Korea and the EU are launching a dedicated supply chain dialogue to reduce dependence on specific countries and diversify channels. This initiative, driven by US-China competition, aims to enhance resilience and strategic partnerships, affecting sourcing and logistics decisions for international firms.
Labor Market and Demographic Dynamics
Vietnam’s young, growing workforce underpins its manufacturing competitiveness. However, wage pressures, skills shortages, and the need for digital upskilling are emerging challenges. Labor market reforms and social stability are essential for maintaining cost advantages and attracting long-term investment.
Energy Geopolitics and Trade Deals
U.S. trade negotiations increasingly bundle energy commitments and geopolitical conditions, as seen in tariff relief tied to partners’ changes in Russian oil purchases. This links market access to energy sourcing, complicating procurement strategies and increasing political risk in long-term offtake contracts.
Agricultural Modernization and Trade Shift
Pakistan is rapidly modernizing its agriculture sector through Chinese technology and investment, aiming for export-led growth and higher yields. This transformation presents new opportunities for agribusiness and logistics, but also heightens dependency on Chinese expertise and market access.
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.
EV and automotive supply-chain shift
Thailand’s auto sector is pivoting toward electrification: 2025 production about 1.455m units (−0.9%), while BEV output surged (reported +632% to 70,914) and sales rose (+80%). Incentives and OEM localization change parts sourcing, standards, and competitor dynamics.
Labor Reforms and Compliance Pressure
Recent labor reforms include a 13% minimum wage hike, stricter workplace inspections, and recognition of app-based couriers as employees. Upcoming changes, such as a proposed 40-hour workweek and enhanced whistleblowing, increase compliance costs and operational complexity for international employers.
Semiconductor reshoring accelerates
Japan is deepening economic-security industrial policy around chips. TSMC plans 3‑nanometer production in Kumamoto, with reported investment around $17bn, while Tokyo considers additional subsidies. This strengthens local supply clusters but intensifies competition for land, power, engineers, and suppliers.
Defense export surge into Europe
Hanwha Aerospace’s ~$2.1bn Norway deal for the Chunmoo long-range fires system underscores Korea’s growing defense-industry competitiveness and government-backed “Team Korea” diplomacy. It signals expanding European demand, offset/industrial-partnership opportunities, and tighter export-control and compliance requirements.
Infrastructure Expansion and Logistics Modernization
India’s 2026-27 budget prioritizes accelerated investment in highways, ports, and digital infrastructure. Initiatives like Gati Shakti have reduced logistics costs below 10% of GDP, improving supply chain efficiency and global competitiveness, and supporting the goal of becoming a $5 trillion economy.
Energy Security and Nuclear Restarts
Japan’s restart of the Kashiwazaki-Kariwa nuclear plant, the world’s largest, marks a pivotal shift in energy policy. This move enhances energy security, reduces fossil fuel reliance, and supports emissions targets, but faces local opposition and regional security risks, especially amid tensions with China and North Korea.
Stable Growth and Investment Climate
President Prabowo projects economic growth above 5% with low inflation, driven by industrialization and the new sovereign wealth fund Danantara. The government is rationalizing state-owned enterprises and courting foreign investors, enhancing Indonesia’s appeal as a stable investment destination.
USMCA Review and North America
The mandated USMCA joint review is approaching, with U.S. officials signaling tougher rules of origin, critical-minerals cooperation, and potential bilateralization. Any tightening could reshape automotive and industrial supply chains, compliance costs, and investment decisions across Mexico, Canada, and the U.S.
US-UK Tariff Tensions Escalate
President Trump’s imposition of 10–25% tariffs on UK exports over the Greenland dispute threatens to cost UK businesses £6–15bn and risks recession. The uncertainty disrupts trade, supply chains, and investment planning, with sectors like manufacturing and chemicals most exposed.
Renewable Energy and Digital Economy Push
Egypt is leveraging its geographic advantages to become a regional leader in renewable energy and digital infrastructure. Major investments in solar, green hydrogen, and digital trade platforms are attracting international partnerships and supporting the country’s green transition and export competitiveness.
Customs crackdown on free zones
Customs plans tighter duty-exemption rules and higher per-item fines to curb false origin, under-valuation, and minimal-processing practices in free zones. Likely impacts include stricter ROO documentation, more inspections, longer clearance times, and higher compliance costs for importers and assemblers.
Ports and logistics corridor expansion
Egypt is building seven multimodal trade corridors, expanding ports with ~70 km of new deep-water berths and scaling dry ports toward 33. A new semi-automated Sokhna container terminal (>$1.8bn) improves throughput, but execution and tariff predictability matter.
Frozen assets, litigation, retaliation risk
Debate over using immobilized Russian sovereign assets to back Ukraine financing is intensifying, alongside Russia’s lawsuits against Euroclear seeking about $232bn. Businesses face heightened expropriation/retaliation risk, asset freezes, and legal uncertainty for custodial holdings, claims, and arbitration enforceability.
Investment Climate and SME Funding Gap
Renewed investor confidence is evident, with FDI pipelines growing, especially in renewables and tech. However, a R350 billion SME funding gap persists, as stricter governance and financial controls limit access to capital for smaller, informal businesses.
Port capacity expansion reshapes logistics
London Gateway surpassed 3m TEU in 2025 (+52% YoY) and Southampton exceeded 2m TEU, backed by multi‑billion‑pound expansion plans and added rail capacity. Improved throughput can reduce bottlenecks, but concentration risk and labour/rail constraints remain for time-sensitive supply chains.
Advanced Manufacturing and Automation
Japan's leadership in semiconductor equipment, packaging, and automation is reinforced by robust growth in AI-driven demand. Investments in high-end manufacturing and automation support global supply chain reliability, with Japanese firms commanding key positions in advanced technology markets.
Red Sea route gradual reopening
Following reduced Houthi attacks, major carriers are cautiously rerouting some services via the Suez/Red Sea again, lowering transit times versus Cape routes. However, renewed US–Iran tensions keep insurance, security surcharges and schedule reliability risk elevated for Israel-linked cargo.
E-Commerce and Logistics Transformation
South Korea’s logistics and third-party logistics (3PL) markets are expanding rapidly, fueled by e-commerce growth, technology adoption, and sustainability efforts. The market is projected to reach $41.7 billion by 2033, with trends toward omnichannel logistics, customized solutions, and green practices shaping operational strategies.
Semiconductor geopolitics and reshoring
TSMC’s expanded US investment deepens supply-chain bifurcation as Washington tightens technology controls and seeks onshore capacity. Companies must manage dual compliance regimes, IP protection, export licensing, and supplier localization decisions across US, Taiwan, and China markets.
Renewable Energy Policy Uncertainty
Despite record renewable capacity additions, delayed energy policy frameworks and political debates undermine investor confidence. France’s continued reliance on imported fossil fuels heightens exposure to geopolitical shocks and threatens long-term energy independence.
Technological Innovation in Battery Reuse
French firms and startups are advancing second-life battery technologies, including hydrometallurgical recycling and smart energy management. These innovations improve recovery rates, reduce environmental impact, and enhance competitiveness in international trade and investment.
Shareholder activism and governance shifts
Japan’s record M&A cycle and activist pressure are reshaping capital allocation and control structures. Elliott opposed Toyota Industries’ take-private price, while Fuji Media launched a ¥235bn buyback to exit an activist stake. Deal risk, valuation scrutiny, and governance expectations are rising for investors.
FDI Surge and Investment Momentum
Foreign direct investment in India surged 73% to $47 billion in 2025, driven by services, manufacturing, and data centers. Major global tech firms announced multi-billion-dollar investments, reflecting confidence in India’s policies, supply-chain integration, and digital infrastructure.
USMCA Uncertainty and Trade Policy
The 2026 USMCA review introduces significant uncertainty for Mexico’s trade and investment climate. Potential renegotiation or non-renewal, new US tariffs, and stricter rules of origin could disrupt supply chains, especially in automotive, manufacturing, and critical minerals, impacting cross-border operations and investment planning.
Supply Chain Vulnerabilities Persist
Supply chain disruptions have eased but remain a concern, especially in sectors reliant on semiconductors and critical materials. Geopolitical tensions, particularly US-China and EU-US, continue to threaten the stability and resilience of German and European supply chains.