Sector-Specific Import Barriers Rising

Washington is replacing blanket tariffs with targeted measures on pharmaceuticals, steel, aluminum, copper, and finished goods. New drug tariffs can reach 100%, while metal duties remain elevated, increasing input-cost risk and forcing sector-specific supply chain restructuring and localization assessments.

Closer EU Economic Alignment

The government continues to emphasize a closer relationship with the EU as part of its growth strategy. Any incremental regulatory or trade facilitation progress could improve market access, reduce frictions for supply chains, and support investment decisions tied to continental operations.

Fiscal Reliance Preserves Resource Nationalism

Oil and gas still generate about a quarter of Russian state budget proceeds, reinforcing Moscow’s focus on extracting revenue from producers through tax mechanisms such as the mineral extraction tax. Investors should expect continued intervention, limited transparency, and prioritization of fiscal resilience over market efficiency.

CUSMA Review and Tariff Uncertainty

The July 1 CUSMA review is Canada’s most consequential business risk. Canada and the U.S. trade roughly $3.5 billion daily, yet unresolved disputes over dairy, procurement, alcohol and digital rules are delaying investment, weakening hiring and clouding cross-border supply chains.

Sanctions Relief Negotiation Volatility

Ceasefire and nuclear talks have reopened debate on phased sanctions relief, frozen assets and limited waivers, but policy remains highly unstable. Companies face abrupt compliance, payment and contract risks as U.S., Iranian and allied positions remain far apart.

Trade Exposure to US Tariffs

German exporters remain highly exposed to US trade policy risk, with 49% expecting further negative effects from tariffs. This threatens autos, machinery, and chemicals, while increasing compliance costs, redirecting trade flows, and complicating pricing and market-entry strategies for global firms.

Fiscal Pressure and Borrowing Costs

High gilt yields are raising the UK’s funding costs and narrowing fiscal room for business support, tax relief or infrastructure spending. Ten-year borrowing costs around 4.8%-4.9% increase macro volatility, shape sterling expectations and influence corporate financing, valuation and investment decisions.

Fiscal Pressure And Policy Risk

Indonesia recorded a first-quarter 2026 budget deficit of Rp240.1 trillion, or 0.93% of GDP, as spending reached Rp815 trillion against revenue of Rp574.9 trillion. Fiscal strain raises the likelihood of revenue-seeking regulation, subsidy adjustments and more intervention in strategic sectors.

Tighter Monetary Conditions Persist

Despite softer monthly inflation, the central bank has paused easing and kept a restrictive stance, with overnight funding around 40% versus a 37% policy rate. Companies face elevated borrowing costs, weaker credit growth and softer domestic demand, affecting expansion plans, inventory cycles and consumer-facing sectors.

Energy Infrastructure Concentration Risk

Iran’s export system remains heavily concentrated around Kharg Island, which handles roughly 90% of crude exports, though Jask, Lavan, and Siri are being expanded. This concentration leaves regional supply chains exposed to military escalation, sabotage, and sudden interruptions in loading and storage operations.

Domestic Economic and Currency Stress

Iran’s economy faces acute inflation, currency weakness, and falling household purchasing power, with food prices reportedly up 50% to 80% and the rial near IRR1,599,500 per dollar on the free market. Consumer demand, labor stability, and operating conditions remain fragile.

Tariff Volatility Reshapes Planning

US trade policy remains highly unstable after the Supreme Court struck down broad IEEPA tariffs, prompting a temporary 10% duty under Section 122 and new sector tariffs. Continued legal and policy volatility complicates pricing, sourcing, contracting, and capital-allocation decisions.

Climate Plan Spurs Regulatory Pressure

Berlin’s 67-measure climate program commits about €8 billion to wind, electric mobility, charging, and heating networks, targeting an extra 27 million tonnes of CO2 cuts by 2030. Yet criticism over insufficient ambition signals continuing policy revisions, compliance pressure, and litigation risk for businesses.

Foreign investment gap persists

Saudi Arabia still needs substantially more foreign direct investment to fund diversification ambitions, yet inflows remain below expectations. Estimates cited annual needs near $100 billion, versus around $30 billion achieved in 2024, implying continued competition for capital and selective dealmaking opportunities.

Sanctions Enforcement And Trade

Ukraine is intensifying enforcement against Russia-linked shipping and illicit trade from occupied territories, including seizure of a suspected shadow-fleet vessel in Odesa. Businesses face higher compliance expectations around cargo provenance, counterparties, and sanctions screening across Black Sea and Mediterranean trade routes.

Agricultural Cost Pressures Intensify

Agriculture, which generated more than $22 billion of exports last year, faces sharply higher diesel and fertiliser costs, labor shortages, and fragile logistics. Farmers report cost increases of 10-30%, with some warning output and export potential could decline materially this season.

Port and Freight Strains

U.S. gateways are seeing softer container throughput alongside rising transport friction. February volumes fell 4.2% year on year to 1.95 million TEU, while Southern California ports posted March declines, reflecting tariff uncertainty, fuel surcharges, capacity constraints, and less predictable shipping schedules.

Black Sea Energy Expansion

Turkey is advancing Black Sea gas development and new exploration partnerships, including with TotalEnergies, to reduce import dependence. Sakarya output is expected to double in 2026, improving medium-term energy security, lowering external vulnerability and creating opportunities in infrastructure and services.

Energy Costs Erode Competitiveness

South African industry still faces severe energy vulnerability through elevated electricity and diesel costs. Mining groups report electricity tariffs up nearly 1,000% since 2007 and fuel shocks are lifting operating costs, margins, inflation risks and backup-power dependence across sectors.

Tourism and Services Scaling

Tourism is becoming a major investment and operating theme, supported by private and sovereign capital. Private-sector tourism investment reached SAR219 billion, total committed investment SAR452 billion, and 2025 tourist arrivals hit 122 million, creating broad opportunities across hospitality, transport, and services supply chains.

Government Market Interventions

Seoul has activated emergency stabilization measures, including restrictions on naphtha and selected fuel exports plus broader supply-management powers. These interventions may protect domestic industry, but they also create regulatory uncertainty, allocation distortions and compliance requirements for energy, chemical and trading firms.

UK-EU Regulatory Re-alignment

London is moving toward dynamic alignment with selected EU rules, especially food, emissions and automotive standards, to cut post-Brexit friction. A proposed food and drink deal worth £5.1 billion annually could ease border costs, but shifting compliance requirements will reshape market-entry strategies.

Hydrogen Ramp-Up Remains Delayed

Germany’s hydrogen strategy is advancing, but only 0.181 GW of electrolysis capacity is installed against a 10 GW 2030 target, with 1.3 GW under construction or approved. Slow infrastructure rollout raises transition risks for steel, chemicals, refining, and cross-border clean industrial investment.

Disaster Resilience and Operational Continuity

A magnitude 7.3 earthquake near Santo in late March damaged buildings and disrupted power and water, reinforcing Vanuatu’s high disaster-risk profile. Cruise island developers must price stronger resilience standards, emergency logistics, insurance costs, and recovery downtime into project economics and supply contracts.

Macroeconomic resilience amid war

Israel’s economy has remained unexpectedly resilient despite war costs estimated above $110 billion, supported by state spending, exports and savings. Forecast growth near 5.2% in 2026 and low unemployment help demand, though fiscal and geopolitical risks remain elevated.

Sanctions Enforcement Hits Oil Flows

Tighter action against Russia’s shadow fleet is raising shipping, insurance, and legal risks for energy traders. The UK has sanctioned 544 vessels, the EU roughly 600, and some estimates say about three-quarters of Russian crude moves via these tankers.

Inflation-energy interest rate tension

Annual inflation eased to 1.9% in March, within the 1-3% target, yet the Bank of Israel kept rates at 4% because regional conflict is lifting energy costs. Borrowing conditions remain relatively tight for investment, real estate and expansion decisions.

Sector Tariffs Reshape Supply Chains

Revised Section 232 measures now cover steel, copper, aluminum derivatives, and selected pharmaceuticals, with rates reaching 50% or 100% for some products. These actions will alter procurement economics, favor localization, and raise costs for manufacturers reliant on imported industrial and healthcare inputs.

EV and Green Export Frictions

China’s dominance in EVs, batteries, and other green sectors is intensifying accusations of overcapacity and subsidy-driven competition. Trade partners are increasingly investigating Chinese exports, raising the likelihood of tariffs, local-content rules, and market-access barriers that could reshape automotive, battery, and clean-tech investment strategies.

Power Security Becomes Constraint

Electricity demand exceeded 1.005 billion kWh on March 31, unusually early, while officials warn southern shortages could emerge in 2027–2028 amid falling domestic gas output and LNG constraints. Energy reliability is becoming a decisive factor for manufacturers, data centers, and investors.

Metal and Industrial Tariff Spillovers

Possible U.S. revisions to steel and aluminum tariffs could apply duties to the full value of imported derivative goods, not only metal content. For Mexico’s deeply integrated automotive, machinery and appliance supply chains, that would materially raise landed costs and margin pressure.

Customs and Regulatory Frictions

New customs rules in force since January 2026 reportedly increase broker liability, documentation burdens, sanctions and seizure powers, while health approvals still face delays of up to two years. These frictions raise border compliance costs, slow product launches and complicate inventory planning.

Nuclear Extension Policy Uncertainty

The government is prioritising longer-term energy security through offshore wind tenders and negotiations to extend Doel 4 and Tihange 3 for another decade. Delays or disputes could affect industrial power-price expectations, investment planning, and Belgium’s competitiveness for energy-intensive sectors.

Port and Rail Bottlenecks Persist

Brazil is expanding logistics capacity, including Paranaguá’s R$600 million Moegão project, which could lift rail’s share of cargo arrivals from 15% to 50%. Yet delayed private connections and legal risks around 12 port auctions, including Santos, continue to threaten throughput and export reliability.

China Blockade Risk Escalates

Beijing’s expanded exercises and near-100-vessel regional deployments underscore a serious blockade scenario that could disrupt shipping, insurance, air traffic and cross-strait commerce. For multinationals, even gray-zone interference could delay cargo, raise costs and severely disrupt semiconductor, electronics and manufacturing supply chains.

Semiconductor Investment Momentum Builds

Vietnam is deepening its role in electronics and chip supply chains. Samsung is considering chip testing and packaging investment, reportedly including a possible $4 billion northern plant, reinforcing Vietnam’s attraction for high-tech FDI, supplier clustering and export diversification.