Mission Grey Daily Brief - November 12, 2024
Summary of the Global Situation for Businesses and Investors
The global order is shifting as Donald Trump wins a landslide victory in the US and Germany's coalition government collapses. This marks a shift from neoliberalism to economic realism, with national security considerations taking precedence over market interests. Trump's protectionist policies and China's state-directed capitalism are intensifying geopolitical competition, pressuring businesses to make investment decisions through a geopolitical lens. The era of peak globalisation is behind us, and companies face a choice between rival IT infrastructures, markets, and currency systems. Trump's proposed tariffs and trade war threats are causing concern and uncertainty for many countries, especially those with close trade ties to the US and China.
Trump's Return to the White House and the End of the Neoliberal Era
Donald Trump's return to the White House coincides with the collapse of Germany's coalition government, signalling a shift in the global order. The German government coalition fell apart over disagreements regarding the debt brake, with former Finance Minister Christian Lindner advocating for neoliberal staples such as tax relief, deregulation, and fiscal discipline, while Chancellor Scholz pursues "economic realism", acknowledging that market-driven solutions may no longer work in a world disrupted by geo-economic competition.
Following Russia's invasion of Ukraine, Europe and Russia have economically decoupled, and while a complete decoupling of Western economies from China remains impossible due to extensive interdependence, the Biden administration has turned to export controls, investment restrictions, and a subsidy-driven industrial policy. China's state-directed capitalism is surging to the technological frontier through heavily subsidised industrial policies, threatening industries worldwide.
Trump's protectionist policies and China's state-directed capitalism are intensifying geopolitical competition, pressuring businesses to make investment decisions through a geopolitical lens. The era of peak globalisation is behind us, and companies face a choice between rival IT infrastructures, markets, and currency systems. Diversification, especially in high-tech sectors, is accelerating, potentially leading to competing economic blocs.
Trump's Tariff Plans and the Potential Impact on Global Trade
Trump's proposed tariffs and trade war threats are causing concern and uncertainty for many countries, especially those with close trade ties to the US and China. Trump has threatened to impose tariffs of between 10-20 per cent on all goods coming into the US, and up to 60 per cent on those coming from China, which could trigger global trade wars on a scale we've never seen before.
Indonesia's businesses are concerned that restrictive trade policies from the US will incentivize Chinese producers to divert large quantities of goods to Southeast Asian markets and create barriers for Indonesian exports to the US. Indonesia is China's largest trading partner and the US is the second-largest export market for Indonesian goods, so these policies could significantly impact Indonesia's economy.
Indonesia's government is taking steps to minimize the negative impact of the change of US administration, including pushing for trade deals, diversifying export markets, and improving competitiveness. More regional trade agreements are necessary to navigate the expected wave of protectionism, as such deals would cement a strong foundation for Indonesian businesses to brace for the shift of US policies.
Taiwan's Position in the US-China Trade War
Taiwanese companies with bases in mainland China are in a hurry to relocate back to Taiwan or elsewhere if Donald Trump imposes high tariffs on China. This highlights the delicate position Taiwan finds itself in as it navigates the US-China trade war.
Mexico's Response to Trump's Threats
Mexico is bracing for the challenges ahead as Donald Trump eyes a return to office, with Trump's constant threats on tariffs, massive deportations, and cross-border trade putting the country in a difficult position. Mexico has a new leader, Claudia Sheinbaum, who is more ideological and less pragmatic than the former Mexican president, Andrés Manuel Lopez Obrador.
Sheinbaum's administration could face particular pressure to address US concerns regarding immigration and drug trafficking, and her recent moves to centralize government power by diminishing independent regulatory bodies could violate US-Mexico-Canada Agreement (USMCA) terms, giving Trump grounds to push for trade renegotiations, especially regarding the auto industry and supply chain regulations.
Mexico hopes for peaceful trade dynamics, but experts argue that optimism should be tempered by a realistic understanding of Trump's national security-focused policies, which often prioritize economic protectionism.
Further Reading:
Eoin Burke-Kennedy: Ireland’s €54bn exposure to Trump’s tariff plan - The Irish Times
How A Second Trump Term Could Strain U.S.-Mexico Relations To The Breaking Point - Reform Austin
Indonesia’s businesses fear deluge of Chinese goods after Trump takes office - asianews.network
Trump Wins Big, Germany’s Coalition Falls—A New Global Order? - Social Europe
Themes around the World:
US-China Technology Rivalry
Ongoing U.S. export controls on advanced AI chips and China’s push for domestic alternatives have deepened the tech decoupling. This rivalry forces multinationals to reassess supply chains, R&D investments, and compliance strategies amid shifting rules and heightened IP protection risks.
US Retreat From Climate Treaties
The United States’ withdrawal from the UNFCCC and 65 other international organizations marks a decisive shift away from multilateral climate cooperation. This move risks isolating US firms from global climate finance, standards, and supply chains, impacting competitiveness and international investment.
Regulatory Liberalisation in Insurance Sector
The Insurance Laws (Amendment) Bill, 2025, allows 100% FDI in insurance and eases entry for global reinsurers. This reform enhances capital access, competition, and innovation, making India’s insurance sector more attractive to international investors and supporting broader financial sector growth.
Labor Market Dynamics and Workforce Skills
Labor market conditions, including wage trends, skill availability, and labor regulations, influence operational costs and productivity. Workforce development initiatives and labor reforms are critical for businesses seeking to optimize human capital and maintain competitive advantage.
Semiconductor Industry Strategic Dominance
Taiwan’s leadership in advanced semiconductor manufacturing, exemplified by TSMC’s 2nm chip mass production, remains critical to global technology supply chains. Geopolitical tensions and potential disruptions pose significant risks to international business operations and AI sector investment strategies.
Regional Economic Retaliation Measures
China’s use of economic tools—such as import bans, tourism restrictions, and trade curbs—against Japan and other neighbors highlights its readiness to retaliate over perceived sovereignty threats. These actions create volatility in regional markets and complicate long-term investment planning for multinationals.
Geopolitical Risks and Policy Volatility
India faces heightened geopolitical risks, including US sanctions threats, trade deal delays, and shifting global alliances. These factors create policy volatility, impacting FDI flows, supply chain strategies, and the predictability of the business environment for international firms.
Greenland Sovereignty Crisis Escalates
Intense US pressure to acquire Greenland has triggered a sovereignty crisis, with Denmark and Greenland resisting both purchase and military threats. This standoff poses severe risks to NATO stability, Arctic security, and international business confidence in Danish governance.
Regulatory Environment and Business Reforms
Ongoing regulatory reforms aimed at improving the ease of doing business in Israel enhance investor confidence. Streamlined procedures and improved corporate governance standards positively influence foreign investment and operational efficiency.
Regulatory Environment and Compliance
Enhanced regulatory scrutiny in areas such as data privacy, cybersecurity, and environmental standards is increasing compliance costs for businesses. Companies must navigate complex legal frameworks to avoid penalties and maintain market access, influencing investment and operational decisions.
Political Stability Concerns
Political tensions and governance challenges, including corruption allegations, impact investor confidence. Political uncertainty can lead to policy shifts and social unrest, increasing country risk premiums for international businesses.
Energy Transition Faces Supply Constraints
France’s accelerated shift to electrification and decarbonization is challenged by hardware shortages, grid bottlenecks, and mineral dependencies. Energy supply tensions and infrastructure delays threaten industrial competitiveness and reliability for international operations.
Escalating Western Sanctions Pressure
Western sanctions on Russia, especially targeting energy, finance, and technology, have intensified in 2025-2026. These measures have led to a 24% drop in oil and gas revenues and a 35% weekly loss in oil export income, severely constraining Russia’s budget and global trade integration.
Semiconductor Industry Dynamics
South Korea's semiconductor sector remains critical globally, with investments in advanced chip manufacturing and R&D. However, supply chain disruptions and export controls from major economies affect production timelines and international partnerships, impacting global tech supply chains and investment decisions.
Defense Modernization and Arms Procurement
Taiwan is strengthening its military with a $40 billion defense budget increase and major US arms packages, including HIMARS and advanced missiles. These moves enhance deterrence but may escalate tensions with China, impacting regional investment and operations.
Energy Transition and Security
South Korea's commitment to green energy and reducing fossil fuel dependence drives shifts in energy imports and infrastructure investments. This transition affects industrial costs and supply chains, while geopolitical risks in energy sourcing regions pose challenges to energy security and trade stability.
Energy Supply and Diversification
Turkey's energy sector is marked by efforts to diversify sources amid regional conflicts and global energy price fluctuations. Energy security concerns influence industrial costs and investment in energy-intensive sectors, affecting operational continuity and competitiveness.
Persistent High Inflation Challenges
Turkey’s inflation remains elevated at 30.89%, with projections aiming for 16% by year-end. Tight monetary policy continues, impacting borrowing costs, consumption, and business planning. Inflation volatility poses risks to investment strategies and supply chain cost management.
Structural Labor and Property Market Challenges
High household debt (86.8% of GDP), labor shortages, and a fragile property market with unsold stock and tight credit constrain domestic demand and business expansion. Government stimulus and reforms are needed to address these structural weaknesses and support sustainable growth.
Infrastructure Investment and Modernization
Federal infrastructure spending initiatives aim to upgrade transportation, digital networks, and logistics capabilities. Improved infrastructure enhances supply chain efficiency and attracts foreign direct investment.
Structural Economic Stagnation
Germany’s economy faces its third year of stagnation, with a 0.2% GDP decline in 2024. High energy prices, taxes, and bureaucracy drive record bankruptcies and job losses, impacting investment climate and operational planning for international firms.
Supply Chain Diversification and Realignment
Indian exporters are actively shifting supply chains, establishing subsidiaries in the US and Africa, and targeting new markets in Europe and Asia to offset US tariff risks. This trend is accelerating India’s integration into alternative global value chains and reducing overdependence on single markets.
Environmental Standards and Export Access
Stricter environmental and sustainability requirements in global markets, such as the US ban on Vietnamese seafood, present both risks and opportunities for Thai exporters. Compliance with international standards is increasingly vital for market access and long-term competitiveness.
Infrastructure Expansion And Modernization
Major infrastructure projects, including new airports, railways, and logistics hubs, are underway nationwide. These investments, with public investment up 26% in 2026, improve connectivity, reduce logistics costs, and support Vietnam’s ambition to become a regional economic and transport center.
Saudi-UAE Rivalry Disrupts Supply Chains
The intensifying Saudi-UAE competition in Yemen, especially over control of strategic ports and oil-rich regions, risks fragmenting regional alliances and disrupting Red Sea and Gulf supply chains. This rivalry could alter trade flows and increase operational risks for international businesses.
Technology and Services Sector Leadership
India’s IT, BPO, and digital services sectors continue robust growth, hosting 45% of global GCCs. Investments in digital infrastructure and innovation position India as a global hub for advanced technology, consulting, and cross-border services, attracting international investment and talent.
Escalating US-China Trade Tensions
The US has imposed tariffs up to 17% on Chinese imports, leading to a 20% drop in China’s exports to the US and accelerating supply chain diversification. These tensions disrupt global trade flows and increase operational uncertainty for multinationals.
Political Uncertainty Ahead of Elections
Political volatility, including Parliament dissolution and upcoming elections, creates uncertainty for business operations and investment planning. Coalition dynamics and reform agendas may alter regulatory environments, affecting strategic decisions for international investors.
Regional Political Tensions and Mediation
Turkey’s active mediation in regional conflicts, including the Russia-Ukraine war and Middle East crises, positions it as a diplomatic actor. Political volatility and shifting alliances may impact cross-border trade, investment risk, and supply chain continuity for global businesses.
Political Uncertainty and Election Risks
Upcoming elections and coalition uncertainties create significant risks for policy continuity, fiscal reforms, and investor confidence. Political fragmentation may delay critical reforms and budget processes, affecting business planning and international investment flows.
Energy Transition and LNG Imports Surge
Egypt’s domestic gas production has declined, driving record LNG imports—9.01 million metric tons in 2025, mostly from the US. New agreements with Qatar and Israel aim to secure supply, but Egypt’s shift from exporter to major importer impacts energy costs, industrial competitiveness, and investment strategies.
Energy Policy and Decarbonisation Challenges
Western Australia’s bureaucratic hurdles and integration issues threaten the state’s coal phase-out and decarbonisation goals. Organizational reform is critical to ensure policy coherence and attract investment in clean energy and industrial transformation.
Political Uncertainty and Regulatory Reform
Political instability, policy inconsistency, and upcoming elections in 2026 heighten regulatory risk. Recent reforms in competition law, land equity audits, and foreign investment rules are closely watched by investors, as shifts in governance and regulatory direction could impact market access and business operations.
Natural Gas Export Expansion
Israel’s $35 billion natural gas deal with Egypt marks its rise as a regional energy exporter. While boosting economic prospects, the deal’s durability depends on regional stability and compliance with peace accords, influencing energy trade and investment flows.
India-Israel FTA and Bilateral Trade Shift
India and Israel are advancing a Free Trade Agreement to reverse a 52% drop in Indian exports and boost investment. The FTA aims to expand trade in high-tech, defense, and medical sectors, reshaping supply chains and market access for global businesses.
Domestic Consumption and Innovation Push
China is prioritizing domestic demand and innovation-led growth, launching initiatives to boost consumption and foster high-tech sectors. This shift aims to reduce reliance on exports, presenting new opportunities for global firms in consumer goods, services, and advanced manufacturing.