Critical Minerals and Rare Earths Geopolitics

Brazil’s vast reserves of lithium and rare earths are now central to EU and US supply chain strategies, as both seek to reduce dependence on China. New agreements position Brazil as a key supplier for the global energy transition, but value addition and local benefit remain challenges.

India-EU Trade Deal Reshapes Access

The India-EU free trade agreement, finalized in January 2026, marks India's largest and most complex FTA, opening European markets for Indian goods and services while protecting sensitive sectors. This deal enhances supply-chain resilience, boosts FDI, and positions India as a key alternative to China for global investors.

Strategic Energy Dependency on US LNG

Germany’s rapid shift from Russian to US LNG has created a new energy dependency, with 96% of LNG imports now sourced from the US. This exposes German industry to US political leverage, price volatility, and long-term risks to energy sovereignty and cost competitiveness.

Energy Security and Nuclear Revival

Japan has restarted the Kashiwazaki-Kariwa nuclear plant, boosting energy self-sufficiency and emissions targets. This move, amid regional security tensions, signals a shift toward stable domestic energy sources and reduced reliance on fossil fuel imports, affecting industrial competitiveness.

Privatization and Public-Private Partnerships

Saudi Arabia’s National Privatization Strategy targets 18 sectors and over 220 contracts by 2030, expanding opportunities for foreign firms in infrastructure, utilities, and services. Increased private sector participation will reshape supply chains and investment strategies.

Shifting Global Trade Power Dynamics

China’s record $1.19 trillion trade surplus in 2025, driven by exports to Africa, Southeast Asia, and Latin America, signals a shift in global trade power. The US faces challenges to its traditional dominance, impacting investment strategies and market access for multinationals.

Gold Reserves Offset Sanctions Impact

Russia’s gold holdings, now 43% of reserves, have surged in value by $216 billion since 2022, offsetting losses from frozen Western assets. This financial buffer supports Russia’s war effort and complicates the effectiveness of sanctions, influencing global reserve management strategies.

Industrial Policy and Market Intervention

The US is intensifying industrial policy through subsidies and intervention, particularly in energy and manufacturing. While supporting domestic sectors, these measures increase market volatility and complicate international investment decisions.

Supply Chain Realignment for Shelter Materials

The new legal requirements are driving increased demand for specialized construction materials, ventilation, and reinforced concrete. This is prompting supply chain adjustments, nearshoring strategies, and opportunities for international suppliers, but also risks of bottlenecks and price volatility.

Labor Market Weakness Amid Economic Growth

While US GDP growth remains strong, job creation has slowed, with unemployment rising to 4.4%. AI-driven productivity gains and reduced immigration contribute to a decoupling of growth from employment, raising social and political risks for businesses dependent on domestic demand.

Supply Chain Resilience and Superchain Evolution

China’s supply chain is undergoing rapid digital transformation, leveraging AI, automation, and global logistics networks. This ‘superchain’ approach enhances efficiency and global connectivity, but also increases complexity and dependence on Chinese innovation, impacting global supply chain strategies.

Australia–China Trade Tensions Escalate

Rising trade friction with China, including potential tariffs on steel and ongoing disputes over agricultural exports, threatens key sectors. Policy responses risk retaliation, supply chain disruptions, and market volatility, underscoring the need for diversification and robust risk management for international businesses.

Manufacturing Push Through Deregulation

India aims to triple exports to $1.3 trillion by 2035 by prioritizing manufacturing in 15 sectors and launching the National Manufacturing Mission. The focus is on regulatory simplification, building manufacturing hubs, and reducing red tape rather than heavy subsidies, to boost competitiveness and attract investment.

Shadow Fleet Enables Oil Exports

To circumvent sanctions and price caps, Russia employs a 'shadow fleet' of old tankers, shell companies, and non-Western insurers, maintaining oil exports above price caps. This parallel system heightens risks of regulatory breaches, insurance gaps, and environmental incidents for global traders.

State Intervention and Industrial Subsidies

The German government is expanding subsidies for new gas-fired power plants and industrial electricity, with €12 billion approved by the EU. While intended to ease energy costs and support heavy industry, these measures raise concerns about long-term fiscal sustainability and market distortions.

Agriculture and Resource Export Volatility

Canadian agriculture, especially canola, seafood, and pork, remains highly exposed to tariff disputes. The reopening of the Chinese market is a relief for producers, but ongoing trade tensions highlight the need for diversified export destinations and robust risk management in agri-food supply chains.

Technology Sector and Digital Transformation

India’s electronics exports reached Rs 4 lakh crore in 2025, with mobile phone and semiconductor manufacturing surging. Major global tech firms are increasing hiring and offshoring to India, driven by US visa restrictions and cost advantages, signaling a structural shift in global supply chains.

US-Korea Tariff and Investment Deal

South Korea’s $350 billion investment pledge in the US, in exchange for reduced tariffs, faces delays due to currency volatility and regulatory hurdles. The deal’s implementation and legal uncertainties around US tariffs significantly affect Korean capital flows and global supply chains.

China-Brazil Strategic Alignment

China is deepening its strategic partnership with Brazil, especially in agriculture and infrastructure, amid shifting global power dynamics. Increased Chinese imports of Brazilian soybeans and infrastructure investments strengthen bilateral economic ties and supply chain resilience.

Regional Connectivity and Zangezur Corridor

Turkey supports the Zangezur Corridor, linking Azerbaijan, Armenia, and Turkey, as part of broader South Caucasus normalization. The corridor promises new trade routes and logistics opportunities, but faces geopolitical risks and complex regional negotiations.

Political Instability and Policy Uncertainty

Persistent political instability and inconsistent government policies have slowed economic growth and undermined investor confidence. These uncertainties impact long-term investment decisions and complicate integration into global supply chains, particularly for SMEs and foreign investors.

Saudi Aramco’s Global Investment Drive

Aramco continues to secure international partnerships and invest in energy diversification, influencing global supply chains and capital flows. Its strategic moves, including stake acquisitions and cross-border ventures, impact energy markets and related industries worldwide.

Infrastructure Safety and Operational Risks

Recent fatal crane accidents in major infrastructure projects highlight persistent safety and regulatory enforcement issues. Such incidents can delay project delivery, raise insurance and compliance costs, and affect Thailand’s reputation as a reliable investment destination.

EU-Mercosur Trade Deal Turmoil

France’s staunch opposition to the EU-Mercosur free trade agreement, driven by agricultural and environmental concerns, has isolated it within the EU. The deal’s likely ratification despite French protests signals rising trade policy uncertainty and supply chain risks for agri-food and related sectors.

NATO Unity Threatened by US Actions

US threats to annex Greenland challenge the foundation of NATO, risking alliance fragmentation. Denmark’s security guarantees and military posture are under scrutiny, raising uncertainty for international investors and businesses reliant on transatlantic stability and defense cooperation.

Supply Chain Shifts and Regional Integration

Vietnam’s strategic location and deep integration into RCEP and CPTPP make it a preferred destination for supply chain relocation, especially from China. This strengthens its role in Asian manufacturing but increases exposure to regional competition and geopolitical shifts.

Logistics and Port Infrastructure Crisis

Persistent inefficiencies at major ports, especially Cape Town and Durban, continue to undermine export competitiveness, disrupt supply chains, and cost the economy hundreds of millions of rands annually, despite recent incremental improvements and reform efforts.

Port and Logistics System Weakness

Persistent inefficiencies in South Africa’s ports and railways, especially at Cape Town and Durban, continue to undermine export competitiveness and supply chain reliability. Despite some reforms, structural weaknesses in logistics remain a major constraint for international trade and business operations.

Energy Supply and Cost Pressures

Delays in domestic gas production and reliance on expensive LNG imports have increased energy costs for industry. Pending petroleum law reforms and the need for clean energy to support new sectors, like data centers, are critical for operational planning and cost management.

Fed Independence Faces Political Threats

The US Federal Reserve is under unprecedented political pressure, with DOJ subpoenas against Chair Powell amid Trump administration efforts to influence rate policy. Erosion of central bank independence risks market volatility, higher inflation, and diminished investor confidence in US assets.

Sweeping US Sanctions and Oil Restrictions

The US has intensified sanctions on Iran, targeting oil exports and shipping, with new measures including a 25% tariff on countries trading with Iran. These actions have severely restricted Iran's access to global markets, undermined its fiscal stability, and forced key partners like India to reconsider strategic investments such as the Chabahar port.

Privatization and Industrial Restructuring

Pakistan is accelerating privatization of state-owned enterprises and restructuring its energy and manufacturing sectors. These reforms aim to attract FDI and improve competitiveness, but create transitional risks for supply chains and legacy contracts, especially in infrastructure, energy, and logistics.

Geopolitical Risks and Regional Diplomacy

Egypt’s proximity to regional conflicts, especially Gaza and Sudan, creates persistent geopolitical risks. Diplomatic efforts focus on regional stability, but disruptions can impact trade, investment sentiment, and supply chains, especially via the Suez Canal and border regions.

Labor Reform and Wage Increases

Mexico’s 2026 labor reforms include a 13% minimum wage hike, stricter workplace inspections, and a planned reduction of the workweek to 40 hours. These changes improve worker protections but increase compliance costs and operational complexity, especially for export-oriented manufacturers.

Current Account Deficit and Financing

Brazil’s current account deficit reached US$68.8 billion in 2025 (3.02% of GDP), financed mainly by long-term foreign investment. While trade balances remain positive, deficits in services and primary income require ongoing capital inflows to sustain external stability.

Mining Sector Under Pressure

Mining output has declined due to falling coal and iron ore production, rising costs, and logistical bottlenecks. Global trade tensions, especially US-China tariffs, further threaten export demand, while structural challenges and job losses persist in this critical sector for foreign exchange and employment.