Mercosur-EU Trade Deal Transformation

The historic Mercosur-European Union trade agreement, approved in January 2026, will eliminate tariffs on up to 92% of exports over a decade. This deal is expected to boost Brazilian exports by US$7 billion, especially in agribusiness and processed goods, while requiring compliance with strict sustainability standards.

Northern Sea Route and Arctic Ambitions

Russia’s development of the Northern Sea Route, with Chinese and Indian involvement, aims to create a major Eurasian trade corridor. While promising shorter Asia-Europe shipping, the project faces geopolitical risks, environmental concerns, and possible sanctions exposure for participating firms.

Energy Sector Expansion and Transition

Recent agreements with China and Gulf states are boosting Canadian oil, LNG, and uranium exports, while also fostering collaboration in renewables and clean technology. These developments are pivotal for Canada’s energy sector, supporting both traditional exports and the transition to net-zero goals.

Geopolitical Influence on US Trade Agreements

US trade negotiations with partners like India and Taiwan are increasingly shaped by strategic considerations, such as technology alliances and supply chain security. This trend links trade policy to broader geopolitical objectives, complicating deal-making and impacting global investment strategies.

Labor Mobility and Skills Partnerships

Germany is expanding labor mobility agreements, especially with India, to address skilled labor shortages. Visa facilitation, joint education initiatives, and skilling partnerships are expected to ease talent flows, benefiting sectors such as healthcare, IT, and advanced manufacturing.

Digital Blackouts and Technology Restrictions

Iran’s government has imposed repeated internet blackouts and tightened technology controls to suppress dissent, disrupting business operations, cross-border communications, and digital commerce. These restrictions have also driven a black market for smuggled technology and hindered foreign investment in Iran’s digital sector.

China-Pakistan Economic Corridor Acceleration

CPEC Phase 2.0 is being fast-tracked amid global supply chain disruptions and regional security threats. China’s planned $10 billion investment and new infrastructure projects position Pakistan as a pivotal trade gateway, but success hinges on security, regulatory clarity, and regional stability.

Collapse of Food and Commodity Trade

Iran’s economic turmoil and new U.S. tariffs have severely disrupted food and commodity imports and exports, notably India’s basmati rice trade. Payment delays, shipment cancellations, and rising costs are undermining established supply chains and market confidence.

Robust Public Investment and Infrastructure

The 2026 Investment Program allocates 1.92 trillion TRY to nearly 14,000 projects, prioritizing transport, energy, health, and earthquake resilience. Major railway, logistics, and energy infrastructure upgrades will shape Turkey’s competitiveness and regional supply chain integration.

Geopolitical Realignment and Western Coordination

The Ukraine crisis is accelerating Europe’s push for strategic autonomy and closer EU-US cooperation. Ongoing trilateral talks (Ukraine, US, Russia) and evolving security architectures are influencing investment climates, regulatory frameworks, and the broader geopolitical risk environment for business.

Full Stock Market Liberalization

Saudi Arabia will fully open its stock market to all foreign investors in February 2026, abolishing the Qualified Foreign Investor regime. This landmark reform is expected to attract $9–10 billion in new capital, boost liquidity, and strengthen the Kingdom’s integration with global markets, though transparency and governance remain key concerns.

Green Energy and Ammonia Investments Accelerate

South Korea is investing heavily in green ammonia and renewable energy, aiming to retrofit 24 coal plants for ammonia co-firing and expand clean energy exports. These initiatives support decarbonization goals and position Korea as a leader in Asia’s green transition.

Energy Transition and LNG Import Surge

Egypt is rapidly expanding renewable energy projects, signing $1.8 billion in deals with Norway and China. However, domestic gas production decline and regional supply disruptions have turned Egypt into a major LNG importer, raising costs and supply chain complexity.

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.

USMCA Uncertainty and Trade Tensions

The 2026 review of the USMCA (T-MEC) creates major uncertainty for Mexico’s trade and investment climate. US threats to let the agreement lapse or impose new tariffs could disrupt supply chains, especially in automotive and manufacturing, impacting billions in cross-border trade.

Energy Transition and Hydrogen Leadership

Saudi Arabia is rapidly scaling investments in clean hydrogen, green ammonia, and renewables, surpassing $34 billion in energy transition spending. Major projects and international JVs are positioning the Kingdom as a future leader in low-carbon energy exports and supply chain integration.

Digital Finance and Stablecoin Experimentation

Pakistan’s partnership with World Liberty Financial, linked to the Trump family, on a dollar-pegged stablecoin signals a bold shift toward digital finance. The initiative aims to streamline remittances and attract blockchain investment, but raises regulatory, ethical, and geopolitical concerns.

Uncertainty Over North American Trade Pact

President Trump’s open criticism of the CUSMA/USMCA trade agreement and threats not to renew it create significant uncertainty for Canadian businesses. Disruption of this pact would upend North American supply chains, particularly in automotive and manufacturing sectors, impacting investment and operations.

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.

Debt Crisis and Military Economic Dominance

Egypt’s deepening debt crisis is exacerbated by the military’s control of vast financial reserves and key economic sectors, limiting fiscal flexibility, deterring private investment, and complicating IMF negotiations for structural reform and external financing.

Critical Minerals Supply Chain Security

France is intensifying international cooperation to diversify and secure critical minerals supply chains for EV batteries, reducing reliance on China. This strategic shift is crucial for trade, investment, and the resilience of EV battery second-life operations.

Environmental Governance and ESG Pressures

Environmental and labor issues, particularly in mining and palm oil, have led to regulatory crackdowns, including permit revocations for violators. International investors face growing ESG expectations, and Indonesia’s ability to enforce standards will shape its reputation and access to sustainable finance.

Resilient But Cooling Labor Market

US labor market growth has slowed, with job demand tepid and unemployment stabilizing. While not yet signaling recession, this cooling trend affects wage pressures, consumer demand, and strategic workforce planning for international investors and operators.

Retaliatory Tariffs and Regulatory Risks

The EU is considering €93 billion in retaliatory tariffs and regulatory measures targeting US goods and services. Finnish firms operating in or exporting to the US could face new barriers, compliance costs, and restricted market opportunities.

US Investment Climate and Workforce Scrutiny

High-profile enforcement actions, such as the ICE raid on a Korean battery plant, highlight increased scrutiny of foreign investment and workforce compliance in the US. This environment raises operational risks for international investors and may affect FDI inflows and project execution timelines.

Centralization of Political Power

General Secretary To Lam is consolidating authority, possibly merging party chief and presidency roles. This centralization may enable swift reforms but raises concerns about institutional checks, policy continuity, and long-term governance risks for international 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 Stability and Eskom Turnaround

South Africa’s power grid has achieved its most stable period in five years, following Eskom’s recovery plan and a R254 billion bailout. Load shedding has virtually ended, boosting investor confidence and reducing operational risks for businesses.

Reshoring and Supply Chain Realignment

US policy emphasizes domestic manufacturing and supply chain security, particularly in semiconductors and advanced industries. Major incentives and trade agreements are accelerating reshoring, prompting global companies to reconsider production footprints and invest in US-based operations.

Strategic Diversification Away from U.S. Dependence

Canada is actively seeking to double non-U.S. exports by 2035, driven by repeated U.S. tariffs and trade unpredictability. This diversification strategy is reshaping investment priorities, market access, and supply chain decisions for Canadian and international firms operating in the country.

Energy Transition and Green Ammonia Expansion

Japan is leading Asia in green ammonia co-firing projects and renewable energy investments, targeting decarbonization of power generation. Major projects and international supply agreements position Japan as a regional leader in clean energy, with significant implications for energy-intensive industries and supply chains.

China Trade Tensions Hit Auto Sector

German car exports to China fell by nearly 40% in 2025, while Chinese imports to Germany rose. Ongoing trade frictions, China’s state support for its industries, and Germany’s cautious stance on EU tariffs are reshaping supply chains and market strategies for German manufacturers.

Energy Sector Expansion and Regional Integration

Major investments in natural gas infrastructure, such as the Leviathan field expansion and long-term export deals with Egypt, position Israel as a key regional energy supplier. These developments support energy security and export revenues but are exposed to regional tensions and shifting global energy markets.

Market Volatility Hits Finnish Equities

Finnish stock markets, including major exporters like Nokia and Wärtsilä, saw declines of 3–5% following tariff threats. Investor sentiment has turned risk-averse, with increased volatility and defensive asset rotation affecting capital flows and corporate valuations.

Industrial Policy and Strategic Sector Support

The government’s ‘Future Made in Australia’ agenda prioritizes strategic industries, including metals, energy, and advanced manufacturing, through subsidies, bailouts, and regulatory reforms. While boosting resilience and jobs, this approach raises questions about efficiency, regulatory complexity, and long-term competitiveness.

Macroeconomic Reform and Privatization Drive

Egypt is accelerating economic reforms, including privatization and reducing state economic involvement, to attract foreign investment. The government aims for over 70% private sector investment by 2030, supported by IMF-backed policies, improved credit ratings, and targeted sector incentives.