Export earnings and currency pressure

Port damage is delaying exports of grain and ore, with central bank warnings of lower export revenues and added import needs for fuel and energy equipment. This raises hryvnia volatility and payment risks, impacting pricing, working capital, and hedging strategies for importers/exporters.

Fiscal tightening and sovereign risk

France’s 2026 budget continues consolidation, shifting costs onto sub‑national governments (≈€2.3bn revenue impact in 2026) and sustaining scrutiny after prior sovereign downgrades. Higher funding costs can pressure public procurement, infrastructure timelines, and corporate financing conditions.

South China Sea security spillovers

South China Sea tensions remain a structural tail risk as ASEAN and China push for a Code of Conduct by 2026 amid recurring incidents. Businesses should plan for insurance premium spikes, routing adjustments, and contingency sourcing if maritime frictions intensify.

Yen volatility and intervention risk

Sharp yen swings, repeated “rate-check” signals, and explicit MoU-backed intervention warnings increase FX and hedging risk. Policy signals after the election and BOJ normalization drive volatility, directly affecting import costs, pricing, and earnings repatriation.

Permitting and local opposition hurdles

Large battery projects face heightened scrutiny on safety and environmental grounds. In Gironde, the €500m Emme battery project on a high-Seveso site drew calls for independent risk studies, signalling potential delays, added mitigation costs and reputational risks for investors and suppliers.

Sanctions tightening and compliance spillovers

EU’s proposed 20th Russia sanctions package expands maritime services bans, shadow‑fleet listings, bank designations, anti‑circumvention tools, and export/import controls. Firms operating in Ukraine must strengthen counterparty screening, shipping due diligence, and re‑export controls to avoid violations.

Legislative approval and policy uncertainty

Key cross-border economic initiatives, including the ART and related investment MOU, still require Legislative Yuan review, creating timing and implementation uncertainty. Companies should monitor ratification risk, possible carve-outs, and changes to standards/labeling rules that affect market access and compliance.

US–China tech controls tightening

Advanced semiconductor and AI chip trade remains heavily license-bound. Recent U.S. scrutiny over Nvidia H200 terms and penalties for tool exports to Entity-Listed firms signal elevated enforcement risk, end-use monitoring, and disruption to China-facing revenue, R&D collaboration, and capex plans.

Regional Security and Trade Corridors

Turkey’s role in the Black Sea and Middle East connectivity agenda is growing, but regional conflicts keep logistics and insurance risks high. Disruptions can hit maritime routes, trucking corridors and transit times, affecting just-in-time supply chains and prompting inventory and routing diversification.

LNG export expansion and permitting

The administration is accelerating LNG export approvals and permitting, supporting long-term contracts with Europe and Asia and stimulating upstream investment. Cheaper, abundant U.S. gas can lower energy-input costs for U.S. manufacturing while tightening global gas markets and shipping capacity.

Finanzas aisladas y de-risking bancario

El aislamiento financiero (incluido el estigma AML/CFT y limitaciones de corresponsalía) restringe pagos transfronterizos, trade finance y cobertura. Aumenta el uso de intermediarios, trueque o cripto, elevando costos de cumplimiento, riesgo de fraude y demoras en liquidaciones.

FX regime and liquidity risks

Despite stronger reserves, businesses still face exposure to FX volatility, repatriation timing, and episodic liquidity squeezes as reforms deepen. Pricing, hedging, and local sourcing strategies remain critical, especially for import-intensive sectors and foreign-funded projects.

AI memory-chip supercycle expansion

SK hynix’s record profits and 61% HBM share are driving aggressive capacity and U.S. expansion, including a planned $10bn AI solutions entity plus new packaging and fabs. AI-driven tight memory supply raises input costs but boosts Korea’s tech-led exports.

Sanctions, compliance, crypto enforcement

Ukraine is expanding sanctions against entities and individuals supporting Russia’s defence and financial networks, including crypto payment and mining channels linked to component procurement. This raises counterparty, KYC/AML and re-export control burdens for regional traders and service providers, especially across hubs like UAE and Hong Kong.

USMCA review and tariff risk

The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.

Critical minerals re-shoring push

Canberra is accelerating onshore processing and ‘strategic reserve’ policies for critical minerals, backed by allied frameworks and subsidies. Recent antimony shipments highlight momentum, while lithium refining faces cost pressure. Expect incentives, permitting scrutiny, and partner-linked offtake deals.

Monetary policy and dollar volatility

Cooling inflation (CPI 2.4% y/y in January; core 2.5%) is shifting expectations toward midyear Fed cuts. Rate and FX swings affect working capital, hedging, and investment hurdle rates, while tariff-driven relative price changes alter import demand and margins.

Strategic stockpiles and resilience push

Japan’s government and industry continue building resilience via stockpiling, diversification, and domestic capability in materials and energy, accelerated by global geo-economic fragmentation. Businesses should anticipate subsidies tied to reshoring, stricter supply-chain transparency, and contingency planning expectations.

Accelerating LNG exports and permitting

The administration is fast-tracking U.S. energy production and LNG export approvals, reshaping global gas supply and contracting. Cheniere filed for a major Corpus Christi expansion to ~49 mtpa; U.S. LNG exports were ~111 mtpa in 2025, with ~100 mtpa more under construction for 2027–2030.

Foreign investment scrutiny intensifies

Heightened national-security screening of capital flows—via CFIUS and Defense “FOCI” mitigation reviews—raises execution risk for cross-border M&A and minority stakes, especially in aerospace, AI, space, and dual-use sectors, potentially altering valuation, governance terms, and closing timelines.

Sanctions spillovers and compliance

Tightening EU and allied Russia sanctions raise compliance obligations for firms trading regionally, especially in maritime services, finance, and dual-use goods. Enforcement is increasingly focused on circumvention routes through third countries, raising KYC, end-use, and counterpart diligence costs.

US tariff shock and reorientation

Reports indicate a steep US reciprocal tariff (cited at 36%) has raised urgency for export diversification, local value-add, and BOI support measures. Firms face margin pressure, potential order diversion, and renewed interest in rules-of-origin planning and US-facing compliance.

Carbon competitiveness policy uncertainty

Industrial carbon pricing (OBPS and provincial systems) remains central to decarbonization incentives, but is politically contested. Potential policy shifts create uncertainty for long-horizon projects in steel, cement, oil and gas, and clean tech, affecting capex, compliance costs, and supply contracts.

Treasury financing and dollar volatility

Large U.S. debt issuance and signs of softer foreign Treasury demand are steepening the yield curve and adding FX uncertainty. Higher funding costs can tighten credit conditions, affect valuations, and alter hedging needs for importers, exporters, and cross-border investors.

Labor reclassification and cost risk

A labor-law package aims to extend protections to roughly 5.7–8.6 million freelancers and platform workers via “presumed worker status,” shifting proof burdens to employers. Businesses may face higher labor costs, disputes, and operational redesign toward automation and subcontracting changes.

Energy exports and infrastructure constraints

Canada remains a major energy supplier, yet pipeline, LNG, and power-transmission buildout is politically and regulatory complex. This affects long-term contracts and project timelines. Buyers and investors should diversify routes, build flexibility into contracts, and model permitting delays.

Sanctions escalation, maritime compliance

UK and partners continue expanding Russia-related sanctions and are considering tougher maritime actions against “shadow fleet” tankers. UK measures target LNG shipping services and designated energy firms, raising due-diligence burdens for traders, insurers, shipping, and commodity supply chains.

Power tariffs and circular debt

Energy-sector reform remains central to IMF conditionality. Tariff redesign and circular-debt containment can shift cost burdens between households and industry, affecting margins, plant uptime and pricing. Investors face policy risk around subsidies, DISCO recoveries, and contract enforcement in generation and distribution.

China competition drives trade sensitivity

Rapid gains by Chinese EV brands across Europe heighten sensitivity around battery and component imports, pricing, and potential defensive measures. For France-based battery projects, this raises volatility in demand forecasts, OEM sourcing strategies, and exposure to EU trade actions.

Transition and decarbonisation investment needs

Grid expansion plans imply roughly R400bn over 10 years and ~14,400km new lines to connect renewables, amid coal plant retirements around 2029–2030. Financing structure and JETP-linked funding conditions will shape ESG exposure, carbon costs, and industrial siting decisions.

Sanctions and export-control compliance

Canada’s alignment with allied sanctions—especially on Russia-related trade and finance—raises compliance burden across shipping, commodities, and dual-use goods. Businesses need robust screening, beneficial-ownership checks, and controls on re-exports via third countries to avoid enforcement exposure.

Defense spending surge and procurement

Defense outlays rise sharply (2026 budget signals +€6.5bn; ~57.2bn total), with broader rearmament discussions. This expands opportunities in aerospace, cyber, and dual-use tech, while tightening export controls, security clearances, and supply-chain requirements.

High-tech FDI and semiconductor scaling

FDI remains strong with US$38.42bn registered in 2025 and US$27.62bn realised (highest 2021–25). Policy emphasis is shifting toward electronics, semiconductors, AI and rare earths, deepening supplier ecosystems but increasing competition for skilled labour and land.

EU battery regulation compliance burden

EU Batteries Regulation requirements—carbon footprint calculation and disclosure, due diligence and upcoming battery passports—raise data, auditing and IT costs across French supply chains. Non-compliance risks market access, while compliant producers can differentiate via lower-carbon nuclear-powered output.

Steel and aluminum tariff redesign

The administration is considering redesigning Section 232 downstream metal tariffs, potentially tiering rates (e.g., ~15/25/50%) and applying them to full product value. Importers of machinery, appliances, autos, and consumer goods should model margin impacts and reprice contracts quickly.

Electronics PLI and ECMS surge

Budget 2026 expands electronics incentives, including a ₹40,000 crore electronics PLI outlay and ECMS scaling, with production reportedly up 146% since FY21 and ~$4bn FDI tied to beneficiaries. Multinationals gain from supplier localization, but disbursement pace and rules matter.