U.S. Tariff Pressure Escalates

Approaching the July 1 CUSMA review, Canada faces continued U.S. tariffs on steel, aluminum, autos and lumber, plus new Section 301 probes. With 76% of Canadian goods exports historically going south, policy uncertainty is dampening investment, pricing and cross-border supply planning.

Hormuz chokepoint shipping disruption

The Iran conflict has effectively closed or selectively restricted the Strait of Hormuz, backing up hundreds of vessels and tightening global container capacity. Expect higher freight, bunker and “emergency” surcharges, longer transit times, and contract renegotiations favoring carriers across routes.

USMCA Review Drives Uncertainty

The review of the $1.6 trillion USMCA framework has begun amid threats of withdrawal, tighter rules of origin, and new restrictions on Chinese-linked production in Mexico. Businesses face uncertainty over North American manufacturing footprints, agriculture trade, and cross-border investment planning.

Sweeping Tariff Regime Reset

Washington is rebuilding a broad tariff wall after court setbacks, using temporary 10% import duties and Section 301 probes covering roughly 70% to nearly all imports. Policy volatility, litigation, and likely higher landed costs complicate sourcing, pricing, and trade planning.

Ukraine Strikes Disrupt Export Infrastructure

Ukrainian drone attacks on hubs including Tikhoretsk, Novorossiysk and Primorsk are disrupting Russia’s oil logistics. February oil exports fell 850,000 bpd to 6.6 million bpd and revenues dropped to $9.5 billion, increasing supply uncertainty for traders, refiners, and regional transport operators.

Coalition Reforms Raise Policy Uncertainty

The governing coalition is advancing tax, pension, welfare, and health-insurance reforms amid large fiscal gaps, including a €20 billion budget hole in 2027 and €60 billion in each of the following two years. Businesses face uncertainty over taxation, labor costs, and consumer demand.

Textile Export Competitiveness Pressure

Textiles generate about 60% of Pakistan’s exports and employ over 15 million workers, but rising energy costs, customs delays and freight uncertainty are eroding competitiveness. Industry groups warn orders are shifting to Bangladesh, India, Vietnam and Turkey.

Payments and Sanctions Exposure

India’s tentative return to Iranian oil under temporary US waivers highlights persistent sanctions, banking, and settlement risks. Iran’s exclusion from SWIFT and uncertainty over insurance and payment channels show how geopolitical finance constraints can quickly disrupt procurement and trading strategies.

State Ownership and Privatization Push

The government is updating its State Ownership Policy to reduce preferential treatment for state entities, improve asset governance, and expand private-sector participation. For international investors, this could open acquisitions and partnerships, though execution risk, policy reversals, and uneven competitive neutrality remain important concerns.

China Soy Trade Frictions

Brazil is negotiating soybean phytosanitary rules with China after tighter inspections delayed shipments and raised port costs. March exports still hover near 16.3 million tonnes, but certification bottlenecks and buyer complaints expose agribusiness exporters to compliance, timing, and concentration risks.

Nearshoring Momentum with Constraints

Mexico remains a leading nearshoring platform, supported by record FDI of $40.9 billion in 2025 and first-partner status with the United States. Yet investment decisions increasingly hinge on treaty certainty, infrastructure readiness, labor compliance and the durability of tariff-free market access.

Security Ties Supporting Commerce

Australia and the EU paired the trade agreement with a new security and defence partnership, including closer maritime and industrial cooperation. For business, stronger strategic alignment improves confidence in supply continuity, defence-adjacent manufacturing, secure technology transfer, and Indo-Pacific logistics resilience.

Logistics Resilience Improves Selectively

Port and logistics performance shows selective strength, with the Port of London reporting its strongest trade volumes in more than 50 years. Infrastructure and river-transport upgrades support import-export resilience, but benefits remain uneven against broader supply-chain fragility and energy-driven disruption.

Infrastructure Spending Supports Logistics

The government’s £27 billion Road Investment Strategy will renew over 9,000 kilometres of motorways and major A-road lanes, while advancing schemes such as the Lower Thames Crossing. Better freight connectivity should support logistics efficiency, regional investment and domestic distribution networks.

Trade Deal Rewires Access

India’s 2026 trade push, including the EU FTA and lower U.S. reciprocal tariffs, materially improves export access and sourcing economics. Duty elimination across 70.4% of tariff lines reshapes market-entry planning, manufacturing location decisions, and supply-chain diversification for multinationals.

China trade exposure and de-risking

Australia remains highly exposed to China demand and policy signals across commodities and refined-fuel sourcing (notably jet fuel). Recent China export curbs on diesel/petrol/jet fuel highlight concentration risk, accelerating supplier diversification to the US and Africa and reshaping freight routes.

State-Led Industrial Strategy Deepens

France continues backing strategic sectors, especially nuclear and energy security, through large-scale state intervention and risk-sharing mechanisms. This supports long-horizon industrial investment opportunities, but also increases regulatory complexity, competition scrutiny, and dependence on public policy decisions.

Oil Export Infrastructure Disruptions

Ukrainian strikes, pipeline damage, and tanker seizures have temporarily halted about 40% of Russia’s oil export capacity, roughly 2 million barrels per day. The outages at Primorsk, Ust-Luga, Novorossiysk, and Druzhba raise delivery, insurance, and price risks across energy-linked trade.

Container Imports Remain Soft

US import volumes are weakening under policy uncertainty. NRF projects first-half 2026 container imports at 12.21 million TEU, down 2.5% year on year, with January at 2.08 million TEU, signalling softer freight demand, inventory caution, and logistics planning volatility.

Execution Gap in Infrastructure

Germany’s infrastructure push is constrained less by funding than by implementation delays. Of €24.3 billion borrowed via the infrastructure special fund in 2025, ifo says only €1.3 billion became additional investment, slowing logistics upgrades and crowding business confidence.

Steel sector trade distress

Mexico’s steel industry is under acute strain from U.S. tariffs and Asian overcapacity. Industry groups say exports to the U.S. fell 55% in the last semester, plants run at roughly 50–55% capacity, and Mexico has extended 10%–35% tariffs on 220 Asian steel products.

PIF Funding Prioritization Shift

Saudi Arabia is reassessing capital allocation across strategic projects as execution costs rise. The Public Investment Fund, with assets around SAR 3.47 trillion, remains central, but tighter prioritization increases project-selection risk, financing discipline, and the need for stronger commercial viability from foreign partners.

Tighter monetary conditions persist

The Bank of Israel is expected to keep rates at 4.0% as conflict-driven inflation risks rise. February inflation reached 2.0%, and higher oil, gas and electricity costs may delay easing, increasing financing costs and weakening the near-term outlook for investment-sensitive sectors.

Maritime Rerouting and Transshipment Upside

Regional conflict has diverted cargo toward Pakistani ports, creating a short-term logistics opportunity. Karachi handled 8,313 transshipment TEUs since March 1, while Port Qasim processed about 450,000 metric tons of petroleum and LPG in March, improving Pakistan’s relevance as a regional shipping and redistribution hub.

Rare Earth Supply Chain Leverage

China continues to shape critical-mineral markets through export controls on rare earth elements and magnets. Although overall magnet exports rose 8.2% in early 2026, shipments to the US fell 22.5%, reinforcing supply-security concerns for automotive, electronics, aerospace and defense-adjacent manufacturers.

Automotive rules tightening pressure

Mexico’s auto hub faces a potential overhaul of regional content rules from 75% toward 80–85%, possible U.S.-content thresholds, and tougher audits. A 27.5% tariff is already prompting firms like Audi to evaluate shifting output to U.S. plants.

Energy Shock and Cost Inflation

Middle East disruptions are raising China’s energy vulnerability, with 45% of its oil passing through the Strait of Hormuz. Higher oil prices may lift producer prices but squeeze margins, especially in chemicals, plastics and transport-intensive manufacturing, complicating pricing and monetary expectations.

US-China Tech Controls Tighten

Export controls on advanced AI chips remain a central commercial constraint despite policy inconsistency. A major smuggling case involving $510 million in restricted AI servers underscores tougher enforcement, higher due-diligence expectations, and rising exposure for semiconductor, server, and cloud supply chains.

Iran War Regional Spillovers

The U.S.-Israel-Iran conflict has become Turkey’s main external shock, increasing geopolitical risk, trade route uncertainty, and market volatility. Any prolonged Strait of Hormuz disruption would hit energy flows, petrochemical inputs, shipping costs, tourism receipts, and broader business confidence in Turkey.

Middle East Conflict Raises Costs

The Middle East war is lifting oil and gas prices, weakening France’s growth outlook and increasing pressure on exposed sectors such as transport, fishing and chemicals. Businesses face higher input costs, renewed inflation risk, and uncertainty around government emergency support measures.

External Aid And Reform Risk

Ukraine’s macro-financial stability still depends heavily on donor flows that are increasingly tied to reform execution and EU politics. Analysts warn missed reform benchmarks could jeopardize billions in support, while a separate €90 billion EU package remains vulnerable to member-state opposition.

Electronics and Semiconductor Upgrading

Global manufacturers are expanding advanced production in Thailand, including new semiconductor capacity from Analog Devices and continued scaling by Seagate. This strengthens Thailand’s role in resilient tech supply chains, but competition from Vietnam and infrastructure demands remain strategic constraints.

Sanctions volatility and waivers

Russia’s trade outlook is dominated by evolving US/EU/UK sanctions, including temporary US waivers allowing some already‑loaded crude to reach buyers. This increases compliance uncertainty, raises due‑diligence costs, and can abruptly shift energy flows, pricing and counterparties.

Gas expansion plans continue

Despite acute wartime disruption, Israel is pressing ahead with a fifth offshore gas exploration tender covering roughly 8,600 square kilometers. For investors, this signals long-term energy opportunity, but project timing, security costs and infrastructure vulnerability remain material execution risks.

Energy Security Vulnerabilities Deepen

Taiwan remains heavily reliant on imported fuel, with natural gas supplying about 47-48% of power generation and inventories covering only roughly 12-14 days. Middle East disruptions and Hormuz risks expose manufacturers to electricity volatility, fuel-cost shocks and possible operational curtailments.

Port Competition and Corridor Shifts

South Africa faces mounting competition from faster-growing regional corridors and ports such as Dar es Salaam, Maputo-Walvis Bay and Nacala-Lobito. Durban’s vessel-size limitations and weak container rail links risk diverting trade flows, reducing hub status and reshaping regional supply-chain routing decisions.