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:
Energy transition supply-chain frictions
Rising restrictions and tariffs targeting Chinese-origin batteries and energy storage (e.g., FEOC rules, higher Section 301 tariffs) are forcing earlier compliance screening, origin tracing, and dual-sourcing—impacting project finance, delivery schedules, and total installed costs globally.
Pemex finances and supply reliability
Pemex reported debt reduced to about $84.5bn and announced multi-year capex to lift crude and gas output, targeting 1.8 mbd oil and 4.5 bcf/d gas. Improved balance sheet helps suppliers, but operational execution and fiscal dependence still affect energy reliability and payments.
US tariffs hit German exports
New US tariff measures are reducing German competitiveness: exports to the US fell 9.3% in 2025 to ~€147bn and the bilateral surplus narrowed to €52.2bn. Firms should reassess pricing, localization and route-to-market for North America.
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.
Low inflation and financing conditions
L’inflation française a touché 0,4% en janvier (plus bas depuis 2020), favorisant une baisse du Livret A à 1,5%. Coût du capital potentiellement plus bas (crédit immobilier ~3,1%), mais consommation et prix de services modérés influencent prévisions de ventes et salaires.
China coercion, economic security
Rising China–Japan tensions are translating into economic-security policy: tighter protection of critical goods, dual-use trade and supply-chain “China-proofing.” Beijing’s reported curbs (seafood, dual-use) highlight escalation risk that can disrupt exports, licensing, and China-linked operations.
Tighter sanctions enforcement playbook
Expanded U.S. sanctions targeting Iranian officials and digital-asset channels signal heightened enforcement, including against evasion networks. Firms in finance, shipping, commodities, and tech face greater due-diligence burdens, heightened penalties risk, and potential disruptions to cross-border payments and insurance.
Election outcome and policy clarity
The February 2026 election and constitutional-rewrite mandate shape near-term policy continuity, regulatory predictability, and reform pace. Markets rallied on reduced instability risk, but coalition bargaining can delay budgets, incentives, and infrastructure decisions crucial for foreign investors and contractors.
Non-tariff barrier negotiations intensify
US demands faster movement on digital-platform rules, agricultural quarantine/market access, auto and pharma certifications, and mapping-data export issues. Stalled Korea–US FTA Joint Committee talks heighten regulatory risk for US and third-country firms operating in Korea and exporting onward.
Shadow fleet interdictions and safety
France’s boarding of the GRINCH and allied moves to seize or detain shadow‑fleet tankers signal a shift from monitoring to physical enforcement. Aging, falsely flagged ships elevate spill, detention and force‑majeure risk for shippers, insurers, and terminals.
Improving external buffers and ratings
Fitch revised Turkey’s outlook to positive, citing gross FX reserves near $205bn and net reserves (ex-swaps) about $78bn, reducing balance-of-payments risk. Better buffers can stabilize trade finance and counterparty risk, though inflation and politics still weigh on sentiment.
Tourism demand mix and margin squeeze
Hotels forecast ~33m foreign arrivals in 2026 versus a 36.7m target; China demand is expected to soften while long-haul grows. Limited room-rate increases and higher labor/social-security costs pressure margins, impacting hospitality, aviation, retail, and real estate revenues.
Trade facilitation and digital licensing
Authorities aim to cut investment licensing from ~24 months to under 90 days via a unified digital platform, while reducing customs clearance from 16 days to five (target two) and moving ports to 7-day operations. Execution quality will determine actual savings.
IMF and EU funding conditionality
Ukraine risks losing over US$115bn linked to IMF ‘benchmarks’ and the EU Ukraine Facility if reforms slip, including customs leadership and public investment management. Any delays could tighten liquidity, slow public payments, and postpone infrastructure and supplier contracts.
Political fragmentation drives policy volatility
Repeated no-confidence votes and reliance on Article 49.3 highlight governance fragility. Expect sudden regulatory shifts, slower permitting, and higher execution risk for infrastructure, energy, and industrial projects as parties bargain issue-by-issue and elections loom.
Haushalts- und Rechtsrisiken
Fiskalpolitik bleibt rechtlich und politisch volatil: Nach früheren Karlsruher Urteilen drohen erneut Verfassungsklagen gegen den Bundeshaushalt 2025. Unsicherheit über Schuldenbremse, Sondervermögen und Förderlogiken erschwert Planungssicherheit für öffentliche Aufträge, Infrastruktur-Pipelines und Co-Finanzierungen privater Investoren.
Sanctions compliance incentives harden
OFSI now states penalties can be reduced up to 30% for self-reporting and cooperation. For online investing firms with cross-border clients, stronger screening, escalation and audit trails become strategic necessities as UK sanctions enforcement intensity rises.
Local content and procurement localisation
PIF’s local-content drive exceeds ~US$157bn, with contractor participation reported at ~67% in 2025 and expanding pipelines of platform-listed opportunities. International suppliers face higher localisation, JV, and in-Kingdom value-add requirements (e.g., IKTVA-style terms) to win contracts.
USMCA review and exit risk
With a mandatory July 1 review, the White House is reportedly weighing USMCA withdrawal while seeking tougher rules of origin, critical-minerals coordination, and anti-dumping. Heightened uncertainty threatens North American integrated supply chains, automotive planning, and cross-border investment confidence.
FCA crypto regime tightening
FCA’s CP26/4 and Consumer Duty guidance pull crypto trading, custody and safeguarding into mainstream conduct standards, with an authorisation gateway due Sept 2026–Feb 2027 and full regime expected Oct 2027—reshaping UK market entry and product design.
USMCA review and regional risk
The coming USMCA review is a material downside risk for North American supply chains, with potential counter-tariffs and compliance changes. Canada’s central bank flags U.S.-driven policy volatility; businesses may defer capex, adjust sourcing, and build contingency inventory across the region.
Digital regulation targets big tech
Regulators are escalating scrutiny of platforms and AI: the ICO and Ofcom opened investigations into X/Grok, while CMA reforms and interventions aim for faster, more predictable merger and market oversight. International tech and investors should expect higher compliance costs and deal-execution uncertainty.
Forced-labor import enforcement intensifies
CBP enforcement under the Uyghur Forced Labor Prevention Act continues to drive detentions and documentation demands, increasingly affecting complex goods. Companies need deeper tier-n traceability, auditable supplier evidence, and contingency inventory planning to avoid port holds and write-offs.
Balochistan militancy and corridor security
Repeated attacks in Balochistan target transport links and state assets, raising security costs for CPEC, mining and logistics around Gwadar. Heightened risk threatens project timelines, insurance premiums and staff safety, complicating due diligence for greenfield investment.
U.S. tariff and ratification risk
Washington is threatening to lift tariffs on Korean goods from 15% to 25% unless Seoul’s parliament ratifies implementation laws tied to a $350bn Korea investment pledge. Exporters face pricing shocks, contract renegotiations, and accelerated U.S. localization pressure.
Black Sea corridor export fragility
Ukraine’s maritime corridor still carries over 90% of agricultural exports, yet repeated strikes on ports and approaches cut monthly shipments by 20–30%, leaving about 10 million tonnes of grain surplus in 2025. Unreliable sailings increase freight, insurance, and contract-performance risk.
EV manufacturing shift and competition
Thailand’s EV ramp-up is rapid: 2025 BEV production +632% to 70,914 units; sales +80% to 120,301. Chinese-linked supply chains expand as legacy OEMs rationalize capacity. Opportunities rise in batteries, components, and charging, alongside policy and localization requirements.
Sanctions, compliance, crypto enforcement
Ukraine is expanding sanctions against entities and individuals supporting Russia’s defence and financial networks, including crypto payment and mining channels linked to component procurement. This raises counterparty, KYC/AML and re-export control burdens for regional traders and service providers, especially across hubs like UAE and Hong Kong.
AI Basic Act compliance duties
South Korea’s AI Basic Act introduces requirements for transparency and labeling of AI-generated content, plus human oversight for high-impact uses in health, transport and finance. Foreign providers with large user bases may need local presence, raising compliance and operating overhead.
UK-Russia sanctions escalation compliance
The UK is tightening Russia measures, including designations and a planned ban on maritime services (transport, insurance) supporting Russian LNG to third countries, alongside a lower oil price cap. This elevates due-diligence needs for shipping, energy, and finance.
PPE 2035: nucléaire relancé
La France adopte la PPE3 par décret: six EPR2 confirmés (première mise en service vers 2038) et option de huit supplémentaires, avec objectifs ENR revus à la baisse. Impacts: coûts électriques, contrats long terme, besoins réseau et localisation industrielle.
Energy balance: gas, power reliability
Declining domestic gas output and seasonal demand spikes raise LNG import needs and elevate power-supply stress. Businesses face risks of higher tariffs, intermittent load management, and input-cost volatility for energy-intensive manufacturing. Energy contracts, backup generation, and efficiency investments are increasingly material.
Housing and construction capacity constraints
Housing commencements and completions remain below national targets, signalling ongoing constraints in labour, permitting and materials. Construction volatility can disrupt demand for building products, logistics and services, and keep pressure on wages and inflation—affecting operating costs for project-based investors.
Tasas, inflación y costo financiero
Banxico pausó recortes y mantuvo la tasa en 7% ante choques por IEPS y aranceles a importaciones chinas; además elevó pronósticos de inflación (meta 3% se desplaza a 2027). Esto encarece financiamiento, altera valuaciones y afecta coberturas cambiarias y de tasas.
Logistics disruption and labor risk
Rail and potential port labor disruptions remain a recurrent risk, with spillovers into U.S.-bound flows. For exporters of bulk commodities and importers of containerized goods, stoppages elevate inventory buffers, demurrage, and rerouting costs, stressing time-sensitive supply chains.
Water infrastructure failure risk
Water and sanitation systems face an estimated R400 billion rehabilitation backlog, with many municipalities rated “poor” or “critical.” Recent Gauteng outages affected up to 10 million people after power trips. Operational disruption risks include plant shutdowns, hygiene, and industrial downtime.