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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

Taiwan — caught between Xi Jinping’s aggressiveness and Donald Trump’s unpredictability - Deccan Herald

Trump Wins Big, Germany’s Coalition Falls—A New Global Order? - Social Europe

Trump to target EU over UK in trade war as he wants to see ‘successful Brexit’, former staffer claims - The Independent

Trump told Putin not to escalate the war in Ukraine in their first postelection call, a report said - Business Insider

Themes around the World:

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Supply Chain Resilience Imperative

Recent energy shocks, mineral restrictions, and market volatility reinforce the need for redundancy in Japan-linked supply chains. Firms should expect higher emphasis on inventory buffers, dual sourcing, contract security, and infrastructure resilience as Japan balances efficiency against a less predictable regional environment.

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Energy Price Shock Exposure

UK energy bills will rise 13% from July, with gas costs up 24%, underscoring dependence on volatile imported fuels. Higher industrial power costs, low gas storage and Middle East supply disruptions raise operating expenses, inflation risks and manufacturing uncertainty.

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Ports Gain Strategic Importance

While canal receipts have fallen, Egyptian ports are expanding as alternative logistics nodes. In 2025, ports handled 11.1 million TEUs, up 24.3%, while transit containers rose 36%, supporting new Gulf-Europe corridors and selective opportunities in warehousing, distribution, and maritime services.

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EU Investment Pivot Accelerates

The EU has put €11.5 billion behind South Africa’s clean energy, transport and pharmaceutical sectors, while negotiating better trade terms and a critical minerals pact. This could reshape financing flows, supplier ecosystems and export orientation toward Europe.

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Trade Corridor Importance Increases

With Hormuz disruptions and wider Middle East conflict risks, Turkey’s diversified supply structure and corridor assets gained strategic value. First-quarter gas imports reached 19.2 bcm and oil-product imports 3.32 million tons, underscoring Turkey’s importance for regional logistics, re-export, and procurement strategies.

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Strategic Shift Toward Resilience

Ongoing geopolitical frictions are accelerating China-plus-one sourcing, critical mineral stockpiling, and supply-chain localization strategies. Businesses reliant on China must balance cost advantages against concentration risk, sanctions exposure, and sudden regulatory change, especially in politically sensitive or high-technology sectors.

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Gwadar and Transit Opportunity

Geopolitical disruption is also creating upside for Pakistan’s ports and transit role. Gwadar, Karachi, and Port Qasim are gaining relevance as alternative trade routes, while new transit arrangements and CPEC Phase 2.0 could expand logistics, warehousing, and industrial investment opportunities.

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Fuel Security Risks Persist

South Africa remains highly exposed to external oil-product disruptions, importing all crude and about 81% of petrol, diesel and paraffin use. Limited strategic stocks, weak fuel-data governance and port-centered storage create material transport, cost and business-continuity risks.

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Energy Diversification and Sanctions Risk

India has diversified crude sourcing across roughly 40 countries, but possible US moves to end waivers on Russian oil purchases could reshape procurement economics. Energy-intensive sectors should plan for supply shifts, compliance reviews and renewed volatility in fuel costs.

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State Intervention in Strategic Industries

Berlin is taking a more activist industrial posture, including a planned 40% stake in defense group KNDS, valued around €18-20 billion. International businesses should expect greater state influence over strategic sectors, technology retention, ownership structures, and cross-border deal approvals.

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Competitive manufacturing relocation opportunity

India is pushing for tariff advantages over Asian rivals such as Vietnam, Bangladesh, Sri Lanka, and Pakistan, which could materially influence global firms’ China-plus-one allocations, export-platform investments, and long-term supply-chain diversification into Indian manufacturing clusters.

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Defense Spending Industrial Upside

France’s planned military spending increase of €36 billion by 2030, lifting the total to €436 billion, will strengthen demand for munitions, drones, missiles and related infrastructure. This creates opportunities for defense-adjacent manufacturing, though budget crowding-out risks remain for non-priority sectors.

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Shadow Fleet Shipping Disruption

European authorities are increasingly intercepting and inspecting vessels tied to Russia’s shadow fleet, including recent seizures and expanded stop-and-search powers. This raises freight uncertainty, maritime legal risk, environmental liability and delivery delays for cargoes connected to Russian oil and related trade routes.

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Escalating sanctions enforcement risks

EU and UK measures are tightening around Russian oil, banks, crypto channels and third-country facilitators, while Western navies are actively intercepting shadow-fleet tankers. This raises compliance, shipping, insurance and payment risks for firms exposed to Russian-linked cargoes or counterparties.

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Record foreign investment wave

Choose France delivered €93 billion across 71 announcements and more than 15,000 jobs, led by AI, logistics, health, steel, and energy. The surge improves market opportunities, but execution, permitting, and grid access will determine whether commitments translate into operations.

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Energy Infrastructure War Damage

Airstrikes and conflict-related disruption have damaged Iranian businesses and parts of the oil sector, weakening production, tax revenues and logistics reliability. Even if fighting pauses, reconstruction needs, asset impairment and periodic military flare-ups will continue complicating investment and supply planning.

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Monetary Tightening Stays Restrictive

The central bank kept rates unchanged at 19% deposit and 20% lending as inflation stayed elevated at 14.9% in April. High borrowing costs, coupled with expected inflation volatility, constrain corporate financing, investment expansion, consumer demand, and working-capital management.

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Automotive Transition and Chinese Competition

Germany’s auto sector faces intensifying pressure from Chinese EV makers, technology shifts, and weaker legacy competitiveness. Cooperation with Chinese firms, possible production in German plants, and regionalized manufacturing strategies could reshape investment decisions, supplier networks, employment, and market positioning.

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Maritime resilience and connectivity

Saudi authorities are actively supporting shipping continuity through transit facilitation, new services, and closer coordination with industry. The kingdom said it launched over 19 new shipping services and held more than 40 coordination workshops, helping preserve cargo movement despite conflict-driven maritime disruptions.

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Chinese Project Security Pressures

Pakistan is creating a dedicated WAPDA security force after repeated attacks on Chinese engineers disrupted hydropower and CPEC projects. Continued security failures risk delays, cost overruns and strained investor confidence in strategically important infrastructure and cross-border industrial partnerships.

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Critical Minerals Drive Strategic Competition

South Africa’s mineral base, including globally important manganese reserves, is attracting stronger EU and US interest as buyers seek alternatives to China-linked supply chains. For investors, this supports mining and processing opportunities, but raises policy, beneficiation and geopolitical bargaining risks around export terms.

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Trade Geography Rebalancing

South Korea’s export destinations are shifting unevenly, with May shipments up 59.1% to the United States, 58.4% to ASEAN, and 2.4% to the EU, while Middle East exports fell 7.7%. Businesses should reassess routing, customer exposure, and regional demand concentration.

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Industrial Input Costs Stay Elevated

Adjusted Section 232 duties on metals and derivative products, alongside selective reduced-rate carveouts, will keep U.S. industrial input pricing uneven. Exporters and manufacturers selling into the U.S. may face margin pressure, repricing needs and incentives to increase American content.

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AI Sovereignty and Digital Regulation

Canada’s new $2.3 billion AI strategy emphasizes sovereign compute, a public supercomputer and reduced dependence on foreign hyperscalers. The policy creates opportunities in data infrastructure and enterprise adoption, but also raises questions around regulation, procurement, cross-border data handling and tech market access.

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Defense Industry Expansion Opportunities

Ukraine’s defense-industrial capacity has risen from roughly $1 billion in 2021 to as much as $55 billion annually, with partner-backed models channeling about $3 billion since 2024. This creates opportunities in manufacturing, localization, components, dual-use technology and cross-border industrial partnerships.

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Growth outlook remains constrained

Despite stronger oil income and resilient markets, broader growth is under pressure from conflict and uncertainty. The IMF cut Saudi Arabia’s 2026 growth forecast by 0.9 percentage points to 3.1%, signaling softer demand conditions for real estate, tourism, aviation, and discretionary corporate investment.

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Fiscal Dependence on External Aid

Ukraine received another €2.8 billion EU tranche in June, lifting Ukraine Facility support above €29.4 billion, while broader 2026-27 needs remain externally financed. Business conditions therefore remain closely linked to donor continuity, reform delivery, and sovereign liquidity management.

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China Ties Stabilise Uneasily

Canberra is seeking a more stable, productive relationship with China, but security frictions persist around maritime transparency and regional coercion. For business, this supports trade continuity while preserving medium-term policy volatility across resources, agriculture, education, and logistics.

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State Control of Commodity Exports

Jakarta is centralizing exports of palm oil, coal and ferroalloys through PT Danantara Sumberdaya Indonesia from June, with fuller rollout by 2027. The shift could tighten oversight and FX retention, but raises transition, pricing, contract and shipment execution risks for traders.

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Red Sea logistics hub acceleration

Saudi Arabia is leveraging the crisis to strengthen its role as a regional logistics hub through Red Sea ports, highways, rail links and Neom’s repositioning. This improves supply-chain optionality for Europe-Asia trade and may redirect investment from neighboring hubs.

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US Trade Tensions Escalate

Strained relations with Washington are raising tariff, market-access and reputational risks for exporters and investors. Disputes over BEE, land policy and foreign alignments could affect Agoa access, bilateral trade talks and US capital allocation decisions.

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Judicial and Regulatory Uncertainty

Domestic institutional changes are becoming a material investment constraint. The OECD cut Mexico’s 2026 GDP forecast to 0.8% from 1.3%, citing uncertainty around judicial reform and the replacement of autonomous regulators, especially affecting investor confidence in energy, telecommunications and other strategic sectors.

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China Rare Earth Restrictions

China’s tighter controls on rare earth and dual-use exports to Japan have sharply disrupted critical inputs for electronics, magnets, semiconductors, and medical equipment. March and April shipments reportedly fell 88% and 82% year on year, raising sourcing and production risks.

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Housing Shortages Reshape Policy

Housing undersupply remains a major operating constraint, with the National Housing Supply and Affordability Council projecting 900,000 homes of demand versus 862,000 net new dwellings by 2029, influencing labour mobility, migration politics, construction costs, and location strategies.

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Port and Corridor Capacity Constraints

Trade diversification depends on transport expansion, especially around Vancouver, where the port handles $1 billion in trade daily with 170 countries. Rail, road and airport bottlenecks in the Lower Mainland now represent a direct constraint on export reliability and supply-chain resilience.

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India Trade and Investment Deepening

Canberra is accelerating economic engagement with India through CECA negotiations, stronger energy trade, uranium cooperation and critical-minerals collaboration, creating diversification opportunities for exporters, logistics providers and investors seeking reduced concentration risk from slower or more volatile traditional markets.