Export Diversification and Market Shift

China has offset declining US trade by expanding exports to Africa (up 26.5%), Southeast Asia (up 14%), and Latin America (up 8%). This diversification strategy reduces reliance on Western markets, strengthens ties with the Global South, and reshapes global trade flows.

Renewable Energy Investment Acceleration

Egypt signed $1.8 billion in renewable energy deals with Norway’s Scatec and China’s Sungrow, including Africa’s largest solar project. With a target of 42% renewables by 2030, international financing and technology partnerships are critical for energy security, industrial growth, and climate commitments.

Affordable Housing Crisis and Government Response

Canada’s acute housing shortage has prompted the launch of Build Canada Homes, aiming to accelerate construction and cut red tape. While thousands of units are planned, execution speed and intergovernmental coordination will determine the initiative’s effectiveness for business and workforce stability.

Supply Chain Diversification Gains

Southeast Asia, including Thailand, is capturing sourcing share as global supply chains shift away from China due to tariffs and trade tensions. Thailand’s imports to the U.S. rose 28% in 2025, positioning the country as a key alternative for international supply chain strategies.

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.

AI-Driven Semiconductor Supercycle Surge

South Korea’s semiconductor sector, led by Samsung and SK hynix, is experiencing record profits and export growth due to surging global demand for AI memory chips. This supercycle is reshaping supply chains, boosting exports, and positioning Korea as a critical node in global technology infrastructure.

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.

Oil Revenue Losses and Export Risks

Sanctions and payment repatriation issues have resulted in Iran losing up to 38% of its oil revenue, with only $13 billion of $21 billion received. Protests and instability threaten further disruption to Iran’s 2% share of global oil exports.

ESG Compliance and Export Market Access

Stricter environmental, social, and governance (ESG) standards are becoming mandatory for export access, especially to the US and EU. Recent US bans on Vietnamese seafood due to environmental non-compliance highlight the growing importance of ESG for maintaining global market share and attracting sustainable investment.

Accelerated OECD Accession and Reforms

Indonesia is fast-tracking its accession to the OECD, aligning policies with international standards to improve governance, regulatory quality, and competitiveness. This process is expected to boost investor confidence, enhance the investment climate, and facilitate greater integration with global markets.

Agricultural Import Controls and Supply Chains

France’s suspension of imports of certain South American fruits due to banned substances reflects a tightening of food safety and supply chain standards. This measure, pending EU approval, may disrupt agri-food supply chains and signals stricter enforcement of EU regulations for international exporters.

Impact on Semiconductor and High-Tech Sectors

China’s anti-dumping investigations and export controls on chemicals like dichlorosilane directly threaten Japan’s semiconductor manufacturing. Disruptions could cascade through global electronics supply chains, affecting multinational firms reliant on Japanese high-tech components.

Foreign Investment Trends and Regulatory Hurdles

Foreign direct investment, especially from Japan, is rising in Australian real estate and infrastructure, driven by housing undersupply and growth prospects. However, complex regulatory processes and development approvals present challenges, requiring strategic navigation for international investors.

Automotive Sector Tariff and Rule Changes

Ongoing negotiations on auto tariffs and rules of origin are central to Mexico’s export competitiveness. Mexico seeks tariff reductions for non-compliant vehicles, while the US pushes for higher regional content. These changes directly impact investment and production strategies in the auto sector.

Cautious Federal Reserve Policy Outlook

The Federal Reserve, after cutting rates by 75 basis points in 2025, is expected to pause further easing in early 2026 due to persistent inflation and labor market weakness. This cautious stance affects global capital flows, borrowing costs, and currency markets, influencing international investment strategies.

Shadow Fleet and Sanctions Evasion

Russia increasingly relies on clandestine shipping, reflagging, and opaque logistics to bypass sanctions. US seizures of Russian-flagged tankers and expanded maritime enforcement heighten operational risks for global shipping, insurance, and commodity trade.

Semiconductor Sector Drives Growth

South Korea’s semiconductor industry is experiencing a supercycle, with Samsung forecasting record profits and exports up nearly 39% year-on-year. However, U.S. tariffs and global competition, especially from China and Taiwan, present ongoing risks to supply chains and market access.

Nationwide Protests and Legitimacy Crisis

Iran faces its largest protests in decades, driven by economic collapse, inflation exceeding 40%, and a generational rejection of the ruling system. The unrest, spreading to all provinces, threatens regime stability and disrupts business operations.

Geopolitical Influence and Security Alliances

Australia’s balancing act between the US and China shapes its trade, investment, and security policies. Participation in initiatives like AUKUS and Indo-Pacific partnerships, as well as G7 critical minerals talks, underscores the growing importance of geopolitical alignment for international business operations.

Legal Uncertainty Over US Tariff Authority

Pending US Supreme Court rulings on the legality of emergency tariff measures create uncertainty for global trade partners. Businesses face challenges in long-term planning, as tariff structures and trade agreements could shift rapidly depending on legal outcomes.

Escalating Western Sanctions Pressure

Intensified US and EU sanctions, including new 500% tariffs, are sharply restricting Russia’s energy exports, financial flows, and trade. These measures are undermining Russia’s budget, squeezing oil revenues, and creating significant compliance risks for international businesses.

Persistent Attacks on Energy Infrastructure

Russian strikes on Ukrainian energy assets have caused widespread blackouts, affecting millions and disrupting industrial, transport, and municipal operations. These attacks threaten supply chains, increase operational risks, and require urgent investment in resilient infrastructure.

Infrastructure and Supply Chain Modernization

Record export volumes highlight Brazil’s need for continued investment in logistics, ports, and supply chain resilience. Upgrades are crucial to sustain growth, reduce bottlenecks, and meet rising international standards, especially as trade volumes approach US$700 billion in 2026.

Logistics and Port Inefficiencies

Severe congestion and operational failures at major ports, particularly Cape Town and Durban, have led to export delays and substantial losses for key sectors. These structural weaknesses in logistics undermine South Africa’s competitiveness and disrupt global supply chains reliant on South African goods.

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.

Slow Progress on Energy Transition

Despite ambitious targets, France’s decarbonization rate slowed to 1.6% in 2025, far below the 4.6% annual reduction needed for 2030 goals. Dependence on fossil fuels and policy delays increase regulatory and reputational risks for energy-intensive industries.

US-Taiwan Semiconductor Trade Accord

The 2026 US-Taiwan trade deal slashes US tariffs on Taiwanese goods to 15% in exchange for at least $250 billion in Taiwanese chip investments in the US. This reshapes global supply chains, incentivizes US-based production, and strengthens bilateral economic ties.

Supply Chain Vulnerability and Diversification

Japan’s dependence on Chinese rare earths and strategic materials exposes its industries to supply shocks. Despite efforts to reduce reliance, over 60% of rare earth imports remain from China, highlighting ongoing risks and the urgency of alternative sourcing.

US Tariff Pressures and Policy Shifts

A proposed US bill seeks a 15% tariff on imports from countries with trade deficits, including Mexico. Ongoing legal debates and potential new tariffs raise risks for Mexican exports, particularly in automotive and manufacturing, threatening Mexico’s competitive advantage under USMCA.

Suez Canal Disruptions and Revenue Loss

Regional conflicts, particularly the Gaza war, have caused significant disruptions to Suez Canal traffic, resulting in an estimated $9 billion revenue loss over two years. Rerouted shipping increases global supply chain costs and reduces Egypt’s vital foreign exchange earnings, impacting trade and fiscal stability.

Energy Sector Under Strain

Iran’s oil exports, once above 2 million barrels per day, remain below pre-2018 levels due to sanctions and trade restrictions. The Strait of Hormuz, a critical chokepoint for global oil, faces heightened risk of disruption, threatening energy markets and shipping security.

USMCA Uncertainty and Trade Tensions

The upcoming review of the USMCA agreement injects significant uncertainty into North American trade. Potential renegotiations or expiration could disrupt tariff-free access, supply chains, and investment planning, with heightened risks from ongoing US protectionist rhetoric and tariff threats.

Industrial Policy and Innovation Incentives

The Nova Indústria Brasil policy allocates R$300 billion in financing to boost industry, innovation, and exports, with a focus on green technologies and automotive efficiency. The government is also responding to industrial competitiveness challenges, especially in chemicals and fertilizers, with new fiscal incentives and regulatory reforms.

Political Volatility: Snap Election Gamble

Prime Minister Sanae Takaichi’s dissolution of parliament and snap election on February 8 introduces significant policy uncertainty. The outcome will shape Japan’s fiscal, trade, and security strategies, with potential shifts in economic stimulus, tax policy, and regional diplomacy.

Humanitarian Aid Restrictions and NGO Ban

Israel’s sweeping ban on 37 international humanitarian organizations and new registration requirements have severely restricted aid flows to Gaza. This has heightened reputational and compliance risks for foreign companies and NGOs, and may impact supply chains relying on humanitarian access or local partners.

Labor Market Stagnation and Wage Pressure

US job growth slowed sharply in late 2025, with only 50,000 jobs added in December and unemployment at 4.4%. Hiring is concentrated in healthcare and leisure, while other sectors stagnate. Wage growth remains moderate at 3.8% annually, raising concerns about economic dynamism, consumer demand, and future cost structures.