Mission Grey Daily Brief - November 28, 2024
Summary of the Global Situation for Businesses and Investors
The global situation is marked by geopolitical tensions and economic challenges that could have significant implications for businesses and investors. Donald Trump's return to the White House is set to reshape global trade dynamics, with tariffs on China, Mexico, and Canada potentially disrupting supply chains and increasing costs for businesses and consumers. Meanwhile, the UAE's growing global influence poses challenges for Western countries, as it undermines sanctions against Russia and engages in a policy of adventurism in Africa and the Middle East. In East Asia, Taiwan's revised air raid alert system raises concerns about civilian safety amid escalating tensions with China. Lastly, Israel's recent military victory over Iran has shifted the geopolitical landscape in the Middle East.
Trump's Tariffs and Global Trade
Donald Trump's return to the White House is set to have a significant impact on global trade. Trump has threatened to impose tariffs on China, Mexico, and Canada, citing drug smuggling and illegal immigration as reasons. These tariffs could disrupt supply chains and increase costs for businesses and consumers. For instance, a 25% tariff on Canadian oil could significantly impact gas prices in the Great Lakes, Midwest, and Rockies regions. Similarly, a 25% tariff on Mexican goods, including agricultural products and vehicles, could lead to higher prices for American consumers.
Trump's threat of additional tariffs on Chinese goods over fentanyl flows has raised concerns about a potential trade war between the world's top two economies. Chinese state media has warned against using tariffs as a political tool, emphasizing the potential for mutual destruction. Economists have begun downgrading growth targets for China's economy in anticipation of further tariffs, and are warning Americans to prepare for higher living costs.
UAE's Growing Global Influence
The United Arab Emirates (UAE) is increasing its global influence, posing challenges for Western countries. On the one hand, the UAE is a vital Western ally, partnering with Israel and countering Chinese influence in Africa. It is also a major investor, with sovereign wealth funds directing over $110 billion to US and UK ventures, and a global force in renewable energy.
However, the UAE has undermined Western sanctions against Russia, indirectly supporting its war effort in Ukraine and providing diplomatic cover to Vladimir Putin. Additionally, the UAE has engaged in a policy of adventurism, arming warlords, supporting militias, and fuelling conflict in parts of Africa and the Middle East. This has led to accusations of violating arms embargoes, spreading instability, and contributing to humanitarian disasters.
Taiwan's Revised Air Raid Alert System
Taiwan has lowered the threshold to trigger air raid alarms in case of a Chinese incursion, raising concerns about civilian safety. The Taiwanese defence minister stated that the change was necessary due to repeated and escalating hostilities by China across the Taiwan Strait. However, there are fears that the revised system might leave citizens with less time to seek shelter during a conflict.
Taiwan has been issuing air raid alerts when Chinese military vessels or aircraft breach the 70 nautical miles limit of the Taiwanese coast. The threshold has been revised to 24 nautical miles, potentially reducing the time civilians have to react to a real threat. This adjustment is meant to better align Taiwan's defences with China's strategies, but it also highlights the escalating tensions in the region.
Israel's Military Victory Over Iran
In the Middle East, Israel's military has inflicted a significant defeat on Iran, approaching the magnitude of its 1967 Six Day War victory over Egypt, Syria, and Jordan. This shifts the geopolitical landscape in the region, as Iran's threat network, which included arming the Hezbollah militia in Lebanon with precision rockets, has been significantly weakened.
The defeat of Iran's threat network could have far-reaching implications for the Middle East and global security. It demonstrates Israel's military capabilities and shifts the balance of power in the region. However, it also raises questions about Iran's future actions and the potential for retaliation.
Further Reading:
Donovan’s Deep Dives: Taiwan’s fragile reliance on global supply chains - 台北時報
Kuwait Seeks to Offer Flexible Incentives to Attract Foreign Investments - Asharq Al-awsat - English
Opinion | Three Global Challenges That Will Shape Trump’s Legacy - The New York Times
Poland Arrests German Man Over Alleged Export of Dual-Use Technology to Russia - The Moscow Times
UAE’s growing global influence sets up challenges for the west - Tortoise Media
What could get more expensive if Trump launches a new trade war with Mexico and Canada - CNN
Themes around the World:
China Imposes Beef Tariffs
China’s new 55% tariffs and quotas on Australian beef exports, effective January 2026, threaten to cut trade by a third and cost over AU$1 billion annually. This move disrupts supply chains and signals persistent volatility in Australia-China trade relations.
Iron Ore and Commodity Export Volatility
Australian iron ore exports, a cornerstone of the economy, face volatility due to pricing disputes and declining Chinese demand. This has led to a drop in the national trade surplus, highlighting the sector’s vulnerability to geopolitical and market shifts, impacting investment and economic growth.
Environmental Regulations and Sustainability
Increasing emphasis on environmental compliance and sustainable practices impacts manufacturing processes and supply chain management. Businesses must adapt to stricter regulations and growing consumer demand for sustainability, influencing investment decisions and operational strategies.
Labor Market Reforms and Social Unrest
Recent labor reforms in France have sparked widespread protests and strikes, disrupting transportation and manufacturing sectors. These social tensions pose risks to supply chain reliability and investor confidence, potentially affecting foreign direct investment and operational continuity for multinational companies.
Labor Market and Regulatory Evolution
Mexico’s labor market is adapting to increased demand from nearshoring and supply chain shifts, but regulatory changes, workforce development, and compliance remain critical. Evolving labor standards and business regulations will shape operational costs and investment strategies.
Labor Market And Productivity Gains
Labor productivity increased by 6.8% in 2025, supported by workforce upskilling and digital transformation. Vietnam’s young, tech-savvy population underpins growth in manufacturing and services, but ongoing skills development and social security reforms are vital for sustainable competitiveness.
Labor Market and Human Capital Challenges
Conflict-induced displacement and demographic shifts strain the labor market, impacting workforce availability and productivity. These factors influence operational decisions and investment in human capital development.
Structural Financial System Constraints
Pakistan’s financial system is dominated by government borrowing, crowding out private sector credit. With Rs 37 trillion in public debt exceeding banking deposits, exporters and manufacturers face high borrowing costs, stifling industrial growth and undermining export competitiveness.
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.
Security and Crime Risks
Persistent security challenges, including organized crime and drug-related violence, increase operational risks for businesses. These issues affect logistics, supply chain security, and investor confidence, particularly in northern border regions critical for trade.
Regional Security and Geopolitical Tensions
Iran’s weakened regional influence and ongoing US-Israel confrontation heighten geopolitical risks. The threat of military escalation, regime change scenarios, and proxy conflicts in neighboring countries increase uncertainty for international trade and investment strategies.
Labor Market Dynamics and Skill Development
India's large labor force offers a competitive advantage, but skill gaps and labor market rigidities remain challenges. Government programs aimed at skill development and vocational training are crucial for improving workforce quality, impacting productivity and the success of foreign enterprises.
Climate and Energy Policy Uncertainty
US withdrawal from international climate bodies and evolving energy policies create regulatory uncertainty. This affects investment in clean energy and compliance for global firms, while domestic priorities shift toward solar and resilience.
Currency Volatility
The South African Rand experiences significant volatility influenced by domestic political developments and global market trends. Currency fluctuations affect profitability for exporters and importers, complicating financial planning and investment decisions.
AI and Technology-Driven Competitiveness
Rapid advances in AI and digitalization are boosting China’s productivity and global influence. The government’s support for tech IPOs and AI adoption is reshaping value chains, but also intensifies competition and export controls, impacting cross-border technology flows and business strategies.
Geopolitical Tensions in Taiwan Strait
Heightened military activities and diplomatic frictions around Taiwan increase regional instability. This poses risks to shipping lanes and semiconductor supply chains critical to global technology industries.
Demographic Shift And Migration Policy
In 2026, UK deaths will exceed births, making migration essential for population growth. Political debates on stricter migration controls intensify, affecting labor market dynamics, public services, and long-term business planning for workforce and consumer base.
Political and Regional Security Instability
Ongoing political uncertainty and regional security risks, particularly regarding Afghanistan and Kashmir, affect investor confidence. Pakistan and China are urging verifiable action against terrorism in Afghanistan, while regional disputes continue to pose operational and reputational risks.
US-China Trade Tensions Escalate
The US has imposed a 25% tariff on countries trading with Iran, directly targeting China, Iran’s largest oil buyer. This move risks reigniting the US-China trade war, disrupting global supply chains, and increasing costs for multinational businesses. China’s response and supply chain rerouting are already evident, with US-China trade down 28-38% in 2025 and Southeast Asia gaining share.
Digital Governance Accelerates Project Delivery
India’s PRAGATI platform has resolved over 2,950 governance and infrastructure issues, expediting large-scale projects and reducing bureaucratic delays. This digital governance model improves inter-agency coordination, enhancing the ease of doing business and project execution timelines.
Currency Collapse And Hyperinflation
Iran’s rial has lost over half its value in six months, trading at 1.4 million per US dollar, driving inflation above 42%. This has severely eroded purchasing power, destabilized markets, and triggered nationwide protests, directly impacting trade and investment decisions.
Fiscal Expansion and Debt Risks
Germany’s fiscal policy has shifted toward massive state spending, with over €850 billion in new debt planned by 2035. Bond markets are reacting with rising yields and shrinking risk premiums, signaling concerns over long-term fiscal sustainability and potential tax or inflation impacts on business operations.
USMCA Renegotiation Uncertainty
The upcoming 2026 review of the USMCA trade agreement introduces significant uncertainty for cross-border trade, supply chains, and investment planning. Potential renegotiation or expiration could disrupt tariff-free access and impact sectors like manufacturing, agriculture, and logistics.
Supply Chain Disruptions
Thailand's role as a manufacturing hub faces challenges from global supply chain disruptions, including raw material shortages and logistic bottlenecks. These issues affect production timelines and costs, compelling businesses to diversify suppliers and enhance supply chain resilience.
US-China Trade And Technology Tensions
Trade disputes and export controls between the US and China continue to escalate, with technology restrictions and retaliatory measures impacting semiconductor, automotive, and rare earth sectors. These tensions disrupt supply chains and force global businesses to diversify sourcing strategies.
Financial Services Sector Transformation
The UK’s financial services sector is adapting to loss of EU passporting rights by expanding global partnerships and innovating fintech solutions. This transformation impacts London's role as a global financial hub and influences capital flows and investment strategies.
US-China Strategic Rivalry Intensifies
Escalating trade tensions, technology export controls, and counter-sanctions between the US and China are reshaping global supply chains, investment flows, and regulatory environments. The Taiwan issue and legal-diplomatic confrontations further heighten risks for multinational firms operating in both markets.
Grid Stability Amid Climate Extremes
Australia’s electricity grid demonstrated resilience during recent heatwaves, with solar supplying over 60% of peak demand. However, winter supply risks persist, requiring ongoing investment in storage and backup systems to ensure energy security for industrial users.
Geopolitical Tensions and Regional Stability
Turkey's strategic location between Europe and Asia makes it a focal point for geopolitical tensions, particularly involving Syria, Russia, and the Eastern Mediterranean. These tensions impact trade routes, foreign investment confidence, and regional supply chain stability, necessitating careful risk assessment for businesses operating in or through Turkey.
France’s Opposition to EU-Mercosur Deal
France’s rejection of the EU-Mercosur trade agreement, driven by agricultural sector protests and concerns over unfair competition, highlights deep domestic resistance to further market opening. This stance risks isolating France within the EU and complicates supply chain diversification for international businesses.
Global Supply Chain Shifts and Commodity Prices
Geopolitical tensions, US-China trade disputes, and surging metal prices are reshaping global supply chains. UK businesses must adapt to volatile input costs, trade diversion, and regulatory changes, particularly in sectors reliant on critical minerals and energy.
Political Instability and Coalition Uncertainty
2026 local elections test South Africa’s fragile coalition government, with the ANC’s support declining and opposition parties gaining ground. Political fragmentation risks policy inconsistency, complicating long-term investment decisions and raising concerns over governance and service delivery.
Energy Security and Diversification Drive
Egypt is stabilizing its energy sector through increased domestic production, major LNG import deals with Qatar and Israel, and regional infrastructure projects. These efforts enhance supply reliability and position Egypt as a regional energy hub, impacting industrial competitiveness and investment planning.
Political Instability and Security Risks
Widespread protests, opposition crackdowns, and increased military influence have heightened political uncertainty. These factors disrupt business operations, complicate regulatory predictability, and pose reputational and operational risks for international investors and supply chains.
Labor Market Dynamics
Demographic shifts and labor shortages in South Korea affect productivity and wage structures. These changes influence operational costs and investment decisions, prompting businesses to adopt automation and reconsider workforce strategies to maintain competitiveness.
Administrative Burdens Challenge Agriculture
French farmers demand simplification of administrative regulations, citing restrictive norms and high compliance costs. These burdens affect agricultural productivity, food sovereignty, and the attractiveness of France for agri-business investment and supply chain operations.