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:
Labor Market Dynamics
Labor reforms and demographic trends are influencing workforce availability and costs. Indonesia's young population presents opportunities for labor-intensive industries, but skill gaps and labor regulations remain challenges for investors.
Regulatory Environment and Business Climate
Frequent changes in Turkey's regulatory framework, including taxation and foreign investment laws, create uncertainty for multinational corporations. Navigating these evolving regulations requires adaptive strategies to mitigate compliance risks and capitalize on emerging opportunities.
Trade Agreements Expansion
Vietnam's active participation in multiple free trade agreements (FTAs), including CPTPP and EVFTA, enhances market access and reduces tariffs. This expansion boosts export opportunities, attracts foreign direct investment, and integrates Vietnam more deeply into global supply chains, benefiting multinational corporations and exporters.
Infrastructure Development Initiatives
Government investments in infrastructure, including transportation and digital connectivity, enhance Canada's trade capabilities and supply chain efficiency. Projects aimed at port expansions and rail improvements facilitate smoother export-import processes, attracting foreign direct investment and supporting economic growth.
Environmental Regulations and Green Transition
Stricter environmental policies in China drive shifts towards sustainable manufacturing and renewable energy investments. Compliance costs and opportunities in green technologies influence corporate strategies and supply chain configurations, aligning with global ESG trends.
Economic Reform and IMF Support
Egypt's ongoing economic reforms, supported by IMF programs, aim to stabilize macroeconomic conditions, control inflation, and improve fiscal health. These reforms enhance investor confidence but may involve austerity measures affecting domestic consumption and business costs, influencing trade and investment decisions.
Economic Volatility and Inflation
Turkey faces significant economic volatility marked by high inflation rates and currency depreciation. This environment challenges foreign investors due to unpredictable costs and returns, complicating long-term investment planning and increasing the risk premium for doing business in Turkey.
Labor Market and Workforce Challenges
While skilled labor shortages have eased, structural workforce issues persist, including significant layoffs in manufacturing and union membership decline. Anticipated AI-driven job reductions and sectoral shifts affect productivity, labor costs, and investment decisions, with implications for Germany's industrial output and competitiveness.
Financial Market Volatility and Credit Outlook
Global financial markets exhibit increased volatility driven by cryptocurrency selloffs, economic growth concerns, and geopolitical risks. Despite this, credit conditions remain resilient with stable defaults and healthy investor appetite. However, uneven sectoral and regional performance, coupled with policy uncertainties, could challenge market stability and influence cross-border investment strategies in 2026.
Infrastructure Damage and Reconstruction Needs
Widespread damage to transportation and industrial infrastructure hampers business operations and trade logistics. Reconstruction efforts require substantial investment, presenting both risks and opportunities for international investors and contractors.
Trade Agreements and Regional Integration
Thailand's active participation in ASEAN and trade agreements like RCEP enhances market access and reduces tariffs, promoting export growth. These agreements facilitate smoother cross-border trade, benefiting sectors such as automotive, electronics, and agriculture, and attracting foreign direct investment.
Capital Flight and Industrial Sell-Off
Germany is experiencing accelerated capital flight and sell-offs of strategic industrial assets, exemplified by Covestro's acquisition by Abu Dhabi's ADNOC. Regulatory burdens, high compliance costs, and climate policies drive investment away, weakening Germany's industrial competitiveness and affecting global supply chains and investment strategies.
Digital Economy and Technology Adoption
Rapid digitalization and technology adoption, including fintech, e-commerce, and digital payments, are transforming India's business landscape. This digital shift facilitates greater market access, operational efficiency, and innovation, making India an attractive destination for technology-driven investments and partnerships.
Sanctions and Economic Restrictions
International sanctions, particularly from the US and EU, continue to heavily restrict Iran's trade capabilities, limiting access to global financial systems and foreign investments. These sanctions impact supply chains, increase transaction costs, and deter multinational corporations from engaging with Iranian markets, thereby constraining economic growth and international business operations.
Trade Agreements and Partnerships
Canada's active participation in trade agreements like USMCA and CPTPP enhances market access and reduces tariffs. These agreements facilitate smoother supply chains and investment flows, positioning Canada as a strategic hub for international trade.
French Corporate Investment in Turkey
French and Franco-Turkish firms have invested heavily in Turkey, with €3.6 billion deployed from 2020-2024 and plans for an additional €5 billion over three years. These investments bolster Turkey's production capacity, employment, and export potential, reflecting strong bilateral economic ties. The focus on R&D, innovation, and sustainability initiatives underscores France's strategic interest in emerging markets and diversified supply chains.
Semiconductor Industry Dominance
Taiwan's leadership in semiconductor manufacturing, particularly through companies like TSMC, remains critical to global technology supply chains. Any disruptions or policy changes affecting this sector could have widespread implications for electronics manufacturing worldwide.
US-China Trade Relations
Ongoing tensions between the US and China continue to influence tariffs, supply chain realignments, and investment flows. Businesses face uncertainty due to potential policy shifts, impacting global trade routes and manufacturing strategies, especially in technology and consumer goods sectors.
Cargo Theft Threatens Supply Chains
US companies warn that rampant cargo theft on Mexican highways disrupts supply chains, raises logistics costs, and deters investment. The issue affects bilateral trade under USMCA and demands stronger Mexican government security commitments. Persistent insecurity undermines Mexico's competitiveness as a manufacturing and export hub, posing risks to just-in-time production models and cross-border commerce.
Technological Innovation and Digitalization
France's focus on digital transformation and innovation fosters growth in tech sectors and enhances productivity across industries. Government initiatives supporting startups and R&D investments attract foreign investors and facilitate integration into global digital supply chains.
Currency Volatility and Inflation
Iran experiences significant currency depreciation and inflationary pressures, undermining purchasing power and complicating financial planning for businesses. Currency instability increases costs for imports and affects profitability, posing challenges for foreign investors and local enterprises alike.
Technological Innovation and Digital Economy
Advancements in technology and digital infrastructure drive Canada's competitiveness in global markets. Government support for innovation ecosystems and adoption of digital trade platforms enhance efficiency but require businesses to invest in cybersecurity and adapt to changing consumer behaviors.
Trade Policies and International Agreements
India's evolving trade policies, including tariff adjustments and participation in regional trade agreements, directly affect market access and competitiveness. Understanding these policies is essential for businesses to navigate import-export regulations, optimize supply chains, and capitalize on preferential trade terms.
Infrastructure Damage and Reconstruction Needs
Widespread damage to transportation, energy, and industrial infrastructure hampers business operations and supply chain efficiency. Reconstruction efforts present opportunities for investment but require substantial capital and political stability to ensure successful implementation.
Commodity Export Policies
Indonesia's policies on key commodity exports like palm oil, coal, and nickel are evolving, with export restrictions and tariffs impacting global supply chains. These measures aim to balance domestic resource needs with international trade commitments, affecting commodity prices and availability.
Trade Relations and Export Markets
Israel's trade agreements and export diversification strategies impact its access to global markets. Shifts in trade policies with key partners like the US, EU, and emerging markets affect supply chain logistics and market entry strategies for businesses.
Export Contraction and Trade Surplus Narrowing
Indonesia's exports fell 2.31% year-on-year in October 2025 due to weakening demand from China and falling commodity prices, notably in mining shipments. This caused the trade surplus to narrow sharply to $2.4 billion. Despite this, Indonesia has maintained a trade surplus for 66 consecutive months, supported by sustained demand for palm oil, coal, and gold.
Labor Market Dynamics
Canada faces labor shortages in key industries, prompting immigration policy adjustments and workforce development initiatives. These changes affect operational capacity, wage structures, and investment attractiveness, particularly in manufacturing and technology sectors.
Infrastructure and Technology Constraints
Limited access to advanced technology and infrastructure due to sanctions hampers industrial growth and modernization. This constraint affects productivity and the ability of foreign firms to implement cutting-edge solutions in Iran.
US-China Trade Relations
Ongoing tensions between the US and China continue to influence tariffs, supply chain decisions, and investment flows. Businesses face uncertainty due to potential policy shifts, impacting sectors like technology and manufacturing, and prompting diversification of supply chains away from China.
Infrastructure and Logistics Challenges
Iran faces significant infrastructure deficits and logistical bottlenecks that hinder efficient trade and supply chain management. Improvements in transportation networks and customs procedures are critical to enhancing Iran's connectivity and competitiveness.
Macroeconomic Stability and Inflation Control
Egypt's Central Bank maintains high interest rates (21-22%) to manage inflation, which rose to 12.5% in October 2025 due to fuel price hikes and rent reforms. Despite inflationary pressures, GDP growth remains robust at 5.2%-5.3%, supported by non-oil sectors. This balance affects investment decisions, cost structures, and currency stability for international businesses.
Canadian Stock Market and Investment Opportunities
Canadian equities, particularly in energy, infrastructure, and technology sectors, have outperformed U.S. markets in 2025. Resource-rich companies and firms involved in AI hardware supply chains present promising investment opportunities amid reshoring and supply chain realignment. However, some sectors like railways face headwinds from trade disruptions and labor issues.
Technological Restrictions and Innovation Challenges
Restrictions on technology transfers and access to Western technologies hinder Russia's innovation capacity, affecting sectors like telecommunications and manufacturing. This limits opportunities for collaboration and technology-driven investments, influencing the strategic planning of multinational corporations operating in Russia.
Supply Chain Resilience
Post-pandemic strategies emphasize diversifying supply chains and increasing domestic production capabilities. Canada's focus on critical minerals and technology manufacturing aims to reduce reliance on foreign suppliers, enhancing trade security and attracting foreign direct investment.
Crime and Security Concerns
High crime rates, including theft and vandalism, increase security costs for businesses and deter foreign direct investment. Security risks affect operational continuity and employee safety, requiring enhanced risk management measures.