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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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Strategic industry permitting fast-track

The government is accelerating 150 strategic industrial projects worth €71 billion through faster permitting, streamlined litigation and expanded ready-to-build land. The push benefits batteries, biofuels, health, aerospace and data centers, while increasing execution risk around environmental opposition and legal scrutiny.

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Turkey as Regional Trade Hub

Officials are positioning Turkey and the Istanbul Finance Center as a regional logistics, finance, and headquarters hub, supported by digital one-stop investment procedures and infrastructure ambitions. For multinationals, this creates opportunities in nearshoring, treasury functions, and regional coordination.

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Corporate Governance Reform Momentum

Governance reforms and Tokyo Stock Exchange pressure are pushing firms to unwind cross-shareholdings, improve capital efficiency, and increase buybacks. This is reshaping valuation dynamics, M&A prospects, and investor expectations for foreign shareholders and strategic acquirers in Japan.

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Rising Business Tax Burden

Higher employer National Insurance, elevated business rates and broader tax increases are squeezing margins and slowing expansion. Employer NIC bills rose by £28 billion, while 32% of firms reported cancelling, delaying or reducing property investment because of business rates.

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Sanctions Escalation Hits Oil Trade

US pressure on Iran’s oil, shipping and petrochemical networks is intensifying, with more than 1,000 Iran-linked entities, vessels and aircraft sanctioned since February 2025. Secondary-sanctions risk increasingly deters buyers, shippers, banks and insurers from Iran-related transactions.

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US-UK tariff dispute risk

Washington’s threat of tariffs over Britain’s 2% digital services tax revives transatlantic trade uncertainty. Exporters, technology firms, and investors face planning risk, while any escalation could disrupt market access, pricing strategies, and bilateral commercial negotiations with the UK’s largest ally.

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China Decoupling Through Rerouting

US-China trade friction remains structurally significant, but trade is being rerouted rather than fully reduced. Roughly $300 billion in tariff-exposed goods reportedly bypass duties annually, while suspicious USMCA-related transactions rose 76%, intensifying customs, compliance, and supplier-traceability demands.

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IMF-Driven Fiscal Tightening

Pakistan’s FY27 budget is being shaped by IMF conditions on taxes, fuel pricing, subsidy cuts and tariff adjustments. With a possible Rs15.5 trillion revenue target and disbursements exceeding $1.2 billion pending approval, compliance will strongly influence operating costs, import policy and investor confidence.

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Middle East Shipping Cost Shock

Conflict around the Strait of Hormuz is lifting fuel, insurance and transport costs for US-linked supply chains. Port Long Beach reported container volumes down 5.2% year on year, while higher surcharges are feeding through to retailers, manufacturers and logistics planning worldwide.

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US-Bound Investment Reallocation Intensifies

Taiwanese firms are accelerating investment into the United States under bilateral trade arrangements, with reported commitments of $250 billion and TSMC alone investing $165 billion in Arizona. This supports market access, but may redirect capital, talent, and supplier ecosystems away from Taiwan-based operations.

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Activist Investors Gain Influence

Activist funds are expanding in Japan, supported by governance reform and exchange pressure on capital efficiency. Record campaign activity is increasing pressure for restructurings, divestments, buybacks, and management changes, creating both transaction opportunities and execution risks for investors and counterparties.

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Manufacturing Expansion Faces Labor Constraints

US industrial policy is colliding with labor shortages that limit rapid reshoring. Late-2025 estimates showed roughly 394,000 to 449,000 manufacturing vacancies nationwide, with a projected 2.1 million-worker shortfall by 2030, constraining factory ramp-ups, capital allocation and productivity expectations for investors.

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Manufacturing Competitiveness Pressures

India’s manufacturing push is gaining policy support, yet global friendshoring competition from Vietnam, Mexico and others remains intense. Falling manufacturing share in GVA, land constraints and low private-sector R&D underscore execution risks for companies planning long-term industrial investment.

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Port Capacity and Logistics Upgrade

Major port investments are reshaping trade logistics. Da Nang’s Lien Chieu project will add 5.7 million TEU capacity and handle 18,000-TEU vessels, while Hai Phong’s mega-ship access can reduce foreign transshipment dependence, lower logistics costs and improve reliability for manufacturers and exporters.

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Semiconductor Concentration and Expansion

TSMC’s record Q1 revenue reached NT$1.1341 trillion and profit NT$572.4 billion, with AI demand driving over 30% projected full-year dollar revenue growth. Taiwan remains central to advanced chip supply, but overseas fab expansion is gradually redistributing production, investment, and geopolitical leverage.

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Energy Shock Raises Operating Costs

The Middle East conflict lifted oil, freight and insurance costs, forcing repeated fuel-price increases, higher electricity and gas tariffs, and tighter energy management. For manufacturers, transport-intensive firms and importers, Pakistan’s cost base and margin volatility have materially increased.

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Defense Industry Investment Expansion

Ukraine’s defense sector is becoming a major industrial and technology growth engine, supported by EU guarantees, grants, and joint ventures. Recent programs aim to mobilize about €400 million in strategic technologies, opening opportunities in drones, navigation, communications, and dual-use manufacturing partnerships.

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Supply Chain Ecosystem Deepening

Vietnam is moving from low-cost assembly toward deeper industrial ecosystems, especially in Bac Ninh’s electronics cluster. More than 3,500 foreign-invested projects worth over US$49 billion support scale, but low localisation and limited Tier-1 domestic suppliers remain constraints on resilience and value capture.

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Policy Uncertainty and Security Exposure

Regional conflict has increased Pakistan’s vulnerability to freight disruption, insurance premium increases and energy-market volatility, while domestic business groups still cite policy reversals and weak predictability. Investors should factor elevated contingency, logistics and regulatory-change risks into operating plans.

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Energy Shock and Inflation

March inflation rose to 3.3%, driven by fuel, food, and transport costs after Middle East disruption hit energy markets. Higher input costs, weaker consumer demand, and uncertainty over rates are raising planning risks for importers, retailers, manufacturers, and capital-intensive investors.

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Energy Windfall Masks Inflation Risks

Higher oil prices have temporarily boosted Russian export earnings and budget inflows, but they are also reigniting inflation. Rising fuel, fertilizer and utility costs are squeezing households and businesses, complicating monetary policy and threatening margin stability across agriculture, retail and manufacturing sectors.

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Monetary Tightening and Inflation

Turkey’s central bank held the policy rate at 37% and overnight lending at 40%, while March inflation was 30.87%. Elevated financing costs, softer domestic demand, and delayed rate cuts raise borrowing, hedging, and working-capital pressures for importers, exporters, and investors.

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Afghanistan Corridor And Border Disruption

Pakistan-Afghanistan tensions and failed China-mediated talks continue to impede overland connectivity essential for western trade corridors and Gwadar’s commercial logic. Border insecurity disrupts transit reliability, complicates regional supply chains, and reduces confidence in Pakistan’s role as a stable land bridge to Central Asia.

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Pharma Localization Pressures Expand

New Section 232 pharmaceutical tariffs materially raise pressure to localize production in the United States. Covered imports face tariffs up to 100%, while approved onshoring plans receive a temporary 20% rate, forcing life-sciences companies to reassess manufacturing footprints and capital allocation.

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Logistics networks need modernization

French freight transport remains heavily road-dependent, with road carrying about 85% of goods while inland waterways hold near 3% and fell 1.8% last year. Ongoing reforms and infrastructure gaps affect modal diversification, resilience, and supply-chain cost efficiency.

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Labor Policy Uncertainty Builds

Large May Day mobilizations pushed for a new labor law, stricter outsourcing rules, and stronger protections against layoffs. President Prabowo wants the labor bill completed this year, creating potential compliance shifts on wages, contracting models, platform work, and investor cost assumptions.

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External Accounts Stabilizing Fragilely

March recorded a current-account surplus above $1 billion, remittances of $3.8 billion, and foreign reserves around $15.8 billion, with projections above $18 billion by June. Yet this stability remains exposed to oil shocks, debt repayments, and export weakness.

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Cape Route Shipping Opportunity Loss

Global shipping diversions around the Cape of Good Hope are rising sharply, yet South Africa is capturing limited value because of inefficient ports. Traffic has more than tripled, but falling bunker volumes and weaker transshipment share show missed logistics and services revenue.

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Affordability, Housing and Labour Supply

Persistent affordability pressures, housing shortages and skills gaps continue to shape operating conditions. Ottawa added C$1.7 billion for housing acceleration and C$6 billion for skilled trades, but cost pressures, labour availability and project execution constraints will remain material for employers and investors.

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Industrial Licensing Rules Easing

Authorities are considering reforms to simplify industrial licensing, reduce fees, and ease compliance burdens, including wider payment cycles and clearer land-use rules. If implemented effectively, these changes could improve manufacturing timelines, project execution, and Egypt’s competitiveness for new plants.

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China Pivot Complicates Market Access

Ottawa’s January deal with Beijing, including lower barriers for up to 49,000 Chinese EVs and tariff relief on some Canadian agriculture, is widening strategic friction with Washington. Businesses face heightened policy, compliance, and geopolitical risk across autos, agri-food, and investment planning.

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Fiscal Reform and Infrastructure Push

Berlin is pairing weak growth with a large reform agenda, including a €500 billion infrastructure fund, debt-brake changes and prospective tax relief. If implemented efficiently, this could support construction, defense, transport and digital sectors, though execution risks remain significant.

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Housing Weakness and Debt Drag

Housing markets remain split: Toronto and Vancouver prices are falling while Quebec and Atlantic regions stay firmer. High household debt, softer consumer confidence, and elevated mortgage sensitivity are constraining spending, commercial activity, and real estate-linked investment decisions across major urban markets.

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Stainless Steel Trade Exposure Grows

Higher Indonesian nickel ore and NPI costs have already lifted stainless steel export prices by about US$30 per metric ton. Buyers in Southeast Asia remain cautious, while shifting EU tariff-rate quota rules may distort order timing, margins, and destination-market strategy.

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Climate Risks Threaten Inflation

Heat waves and below-normal monsoon risks could lift food inflation and weaken rural demand, complicating RBI policy and consumption recovery. For businesses, this raises volatility in agricultural inputs, labour productivity, pricing power, and demand forecasts across consumer and industrial sectors.

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USMCA Review and Tariff Risk

Canada’s July 1 USMCA review has become the top trade risk, with Washington pressing for concessions while Section 232 tariffs on steel, aluminum, autos and lumber may persist. The uncertainty affects cross-border investment planning, sourcing, pricing and North American production footprints.