US Tensions Threaten Market Access

Relations with Washington have deteriorated, with reports of a 30% US tariff on South African goods and continued scrutiny of AGOA preferences. For exporters in agriculture, autos, and manufacturing, the risk is reduced market access and greater policy uncertainty.

Protectionist Pressures Increase Compliance

Taiwan’s export orders rose 65.9% in March, yet officials warn protectionist trade policies and U.S. investigations could weigh on future demand. Businesses should expect stricter rules on forced-labor screening, subsidies, tariffs, and origin compliance across Taiwan-linked supply chains.

Critical Minerals Supply Vulnerability

US industry remains exposed to Chinese dominance in rare earth processing and related materials. Prior Chinese restrictions caused US auto supply shortages within weeks, underscoring risks for aerospace, electronics, EVs and defense-linked manufacturing that depend on stable access to strategic inputs.

Energy Security and Transition

Saudi Arabia remains central to global energy markets while building renewables, hydrogen, and gas capacity. Renewable generation rose from 3 GW to 46 GW by 2025, but regional conflict and shipping chokepoints still create volatility for exporters, manufacturers, and energy-intensive industries.

Investor Confidence at Historic Low

A KPMG survey of 400 foreign-company subsidiaries shows Germany’s location rating at a record low, with 52% describing conditions as bad or very bad and 23% planning lower investment. Energy costs, bureaucracy and poor digital infrastructure are the main deterrents.

China trade tensions re-emerging

Australia is widening anti-dumping measures on Chinese steel, including raising rebar tariffs to 24%, prompting warnings from Beijing. The shift signals renewed trade friction risk, potentially increasing input costs for construction and manufacturing while complicating bilateral commercial exposure and sourcing decisions.

Domestic Logistics Capacity Strain

U.S. trucking and intermodal networks are tightening as capacity exits, stricter driver enforcement, seasonal demand, and cargo theft increase pressure. California license cancellations and elevated diesel prices are raising inland transport risk, delivery variability, and operating costs for importers and distributors.

Energy Security Drives Investment

Energy infrastructure remains a core business risk and investment opportunity. Ukraine needs at least €5.4 billion before winter to restore 6.5 GW, while private investors are funding decentralized renewables, storage, and grid upgrades to reduce blackout exposure.

Frozen Assets And Reconstruction Funding

Tehran is pressing for access to billions in frozen assets and external financing for war-related reconstruction, with figures from $6 billion to about $120 billion cited. Any partial release could reshape import demand, state spending priorities, and opportunities in sanctioned-adjacent sectors.

Critical minerals supply-chain surge

Australia and the United States have committed more than A$5 billion to critical minerals projects, supporting rare earths, nickel, graphite, tungsten and gallium. This strengthens non-China supply chains, expands processing investment, and creates new opportunities in mining, refining, technology and defence industries.

Supply Chains Shift Southbound

Taiwan is accelerating diversification through the New Southbound Policy, especially in Vietnam, as firms redesign production networks beyond China. Bilateral Taiwan-Vietnam trade reached about US$40 billion, with roughly 70% of Taiwan’s exports now concentrated in ICT products, computers, and machinery components.

Tighter Russia Sanctions Controls

The UK is tightening export licensing to stop sanctioned goods reaching Russia through third countries. Companies shipping to diversion-risk markets may need new licences and face border delays, raising compliance burdens for manufacturers, logistics providers, and exporters using Eurasian or Caucasus trade routes.

Escalating Oil Export Sanctions

Washington has ended temporary waivers and expanded sanctions on Iran’s shadow fleet, vessels, intermediaries and some foreign buyers, sharply increasing secondary-sanctions exposure. The squeeze threatens roughly 1.6–1.8 million barrels per day of exports, complicating energy trading, shipping finance and commodity procurement.

Rare earth leverage risk

China’s export licensing for rare earths and related materials has become a major commercial vulnerability. With China controlling roughly 60% of mining, above 90% of refining, and about 95% of permanent magnet production, downstream manufacturers face acute disruption risk.

Regulatory and Bureaucratic Overload

Complex regulation and slow permitting continue to deter investment and delay execution. Industry groups say the EU adopted roughly 13,000 legal acts from 2019 to 2024, while companies cite weak public-sector digitalization and cumbersome administration as barriers to faster deployment.

Sanctions Expand Secondary Exposure

Washington is widening Iran-related secondary sanctions to banks, shippers, refiners, and intermediaries, including entities in China, Hong Kong, the UAE, and Oman. Companies now face higher compliance, shipping, insurance, and payment risks if counterparties touch sanctioned energy or logistics networks.

Shadow Finance And Payment Barriers

Iran’s isolation from mainstream banking continues to push trade into yuan settlement, smaller regional banks, shell companies, and barter structures. Payment opacity, higher transaction costs, and enforcement risk complicate receivables, due diligence, treasury operations, and supplier onboarding for foreign firms.

EU Financing Anchors Stability

EU funding is becoming the central macro-financial anchor for Ukraine’s economy and reconstruction market. Brussels approved a €90 billion loan, with about €45 billion planned for 2026, while more than €1 billion in new business summit deals support SMEs, reconstruction, and defense industries.

IMF Dependence and External Financing

Pakistan’s macro stability remains anchored to IMF disbursements, with about $1.2 billion pending and possible programme expansion of $2-2.5 billion. Reserve gaps, budget negotiations, and tax reforms directly shape currency stability, sovereign risk, and investor confidence.

Pharma pricing and resilience concerns

France continues to push medicine affordability, but low generic penetration at 44% versus 84% in Germany highlights structural inefficiencies. Ongoing price pressure and regulation may challenge pharmaceutical margins, while resilience and domestic supply security remain strategic policy concerns.

War spending strains public finances

Israel’s 2026 budget prioritizes security spending at record levels, while war costs since October 2023 have exceeded hundreds of billions of shekels. Higher deficits, rising debt and constrained civilian spending could affect taxation, infrastructure timelines, procurement priorities and macroeconomic stability.

Steel and Metals Trade Shock

Mexico’s steel industry has dropped to 55% capacity utilization, with exports down 53% in 2025 and finished steel output down 8.1%. US duties of 50% on basic metals and 25% on derivatives threaten manufacturing inputs and industrial supply chains.

Sanctions Broaden Secondary Exposure

US sanctions on Iran-linked trade are widening compliance risks for global firms, especially in shipping, energy and finance. Recent measures targeted a 400,000-barrel-per-day Chinese refinery, dozens of shippers and 19 vessels, increasing due-diligence demands across cross-border transactions.

Black Sea Corridor Remains Vital

Despite attacks roughly every five days, Ukrainian ports handled over 21 million tonnes in Q1 and met 98% of targets. The maritime corridor has moved more than 190 million tonnes since 2023, making it essential for exports, shipping revenues, and supply-chain resilience.

Judicial reform investor certainty

Mexico’s judicial overhaul is raising investor concerns over contract enforcement, regulatory disputes and rule-of-law predictability. U.S. officials have openly warned that judges must remain qualified and independent, as any perception of political or criminal influence could weaken capital inflows.

Regulatory Reform and Investment Climate

The new government is advancing an omnibus law and ‘super license’ to consolidate approvals within 180 days and reduce bureaucracy. If implemented effectively, reforms could improve foreign investor entry, shorten project lead times, and partially offset Thailand’s longstanding regulatory complexity.

Energy Transition Infrastructure Gaps

Germany’s energy transition faces mounting scrutiny over grid congestion, storage shortages and high system costs, with one estimate exceeding €36 billion annually. Delays in transmission, backup capacity and digital grid management risk keeping electricity expensive for industry and deterring energy-intensive investment.

Sanctions Circumvention Networks Broaden

Russia’s trade ecosystem increasingly depends on third-country financial and commercial channels. The EU is tightening measures on banks and lenders in places including Kyrgyzstan, Armenia, Azerbaijan, and Laos, while loophole trade through refineries in Turkey, India, and Georgia remains under scrutiny.

Foreign Investment Rules Tightening

Australia remains open to strategic capital, especially from trusted partners, but investments in critical minerals, defence-related assets and infrastructure face closer national-interest scrutiny. FIRB review and security conditions can prolong deal timelines, affecting mergers, project financing and cross-border partnership structuring.

Outbound Chip Investment Reshapes Base

TSMC’s overseas expansion, including reported plans for 12 Arizona fabs, is shifting part of the semiconductor ecosystem outward. This diversifies geopolitical risk for customers, but may gradually redirect capital, talent, and supplier footprints away from Taiwan’s domestic industrial base.

US Trade Deal Rebalancing

Thailand is prioritizing a reciprocal trade agreement with the United States after bilateral trade exceeded $93.6-$110 billion in 2025. Talks target tariffs, automotive standards, pharmaceuticals and farm access, creating material implications for exporters, regulatory compliance and sourcing decisions.

Tourism And Services Vulnerability

Regional conflict is causing booking delays and cancellations in a sector that brought in $65 billion from 64 million visitors last year. Any tourism slowdown would weaken foreign-exchange earnings, pressure the current account and reduce demand across hospitality, retail, transport and real estate.

War Spillover Disrupts Operations

Fragile Gaza ceasefire talks, periodic strikes, and recent conflict with Iran keep Israel’s risk environment elevated. Businesses face interruption risks across staffing, insurance, site security, and planning, while any ceasefire breakdown could quickly tighten transport, energy, and cross-border operating conditions.

Fiscal Consolidation and Tax Reform

Brazil’s 2027 budget targets a R$73.2 billion primary surplus, with debt peaking near 87.8% of GDP in 2029. Simultaneously, consumption-tax reform and tighter tax-benefit rules will reshape compliance costs, pricing, margins, and investment planning across sectors.

Labor Politics Elevate Compliance Risk

May Day mobilizations and business appeals for certainty on wages, outsourcing and layoff rules highlight a sensitive labor-policy environment. For manufacturers and service operators, changes to wage formulas or worker protections could alter operating costs, hiring flexibility, and reputational exposure in labor-intensive sectors.

Compliance Enforcement Gets Costlier

U.S. trade and export enforcement is becoming more punitive and extraterritorial, with large penalties, audit obligations and broader reexport scrutiny. Companies using multi-country manufacturing, distributors or service hubs face rising legal, documentation and board-level compliance demands before entering transactions.