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Mission Grey Daily Brief - January 29, 2025

Summary of the Global Situation for Businesses and Investors

The world is currently facing a multitude of geopolitical and economic challenges. President Trump's aggressive foreign policy and trade war threats have raised tensions with allies and adversaries alike. The Russia-Ukraine war continues to devastate Ukrainian families and North Korea's involvement has led to heavy losses and partial withdrawal of their troops. Congo's conflict with Rwanda-backed rebels has escalated, displacing millions and causing a humanitarian crisis. Diplomatic tensions are rising between the US and Latin American countries over deportation policies and tariff disputes.

US-EU Trade War over Greenland

The US-EU relationship is under strain due to President Trump's threats to seize Greenland. This self-governing Danish territory is strategically important for geopolitical and security reasons, and its abundance of natural resources makes it a critical asset for modern weaponry and dominance in key economic sectors. Trump's aggressive stance has raised the possibility of a trade war between the US and EU, with severe tariffs on Danish exports to the US being threatened. This could significantly impact businesses in both regions, particularly those relying on Danish exports.

Russia-Ukraine War and North Korea's Involvement

The Russia-Ukraine war continues to inflict heavy losses on both sides, with civilians bearing the brunt of the conflict. North Korea's involvement has led to heavy casualties and partial withdrawal of their troops. Kim Jong Un's regime faces growing discontent from younger generations and challenges in maintaining loyalty. The potential for a peace settlement remains uncertain, with President Trump expressing a desire to meet with Vladimir Putin and Zelenskiy emphasizing the need for US leadership in any peace force.

Congo's Conflict with Rwanda-Backed Rebels

Congo's conflict with Rwanda-backed rebels has escalated, with rebels advancing into a key eastern city and causing a major humanitarian crisis. The M23 rebels, one of about 100 armed groups, have captured several towns and advanced into Goma, a regional trade and humanitarian hub. The humanitarian situation is extremely worrying, with hundreds of thousands attempting to flee the violence. Aid groups are struggling to reach displaced people, and the conflict has resulted in one of the world's largest humanitarian crises.

US-Latin America Diplomatic Tensions

Diplomatic tensions are rising between the US and Latin American countries over deportation policies and tariff disputes. Colombia and Mexico have objected to the use of military aircraft for deportations, and Brazil has expressed concern over the treatment of undocumented immigrants. President Trump's aggressive stance has led to retaliatory measures and threats of tariff wars, increasing tensions in the region. Businesses operating in Latin America should monitor the situation closely and prepare for potential disruptions in trade and diplomatic relations.


Further Reading:

A Bulgarian shipping company denies its vessel sabotaged a Baltic Sea cable - The Independent

Colombia quickly found out Trump has no intention of backing down - Sky News

Congo’s forces try to slow Rwanda-backed rebels in the east as protests break out in the capital - The Independent

Deportation crisis: Mexico errs on the side of caution, Brazil summons US embassy chief - EL PAÍS USA

In a split second, Russia wipes out three generations of a Ukrainian family - BBC.com

Kim Jong Un’s grip on power wavers as North Korea’s youth defy loyalty - The New Voice of Ukraine

North Korea troops partially withdraw from frontline in Russia’s Kursk after weeks of heavy losses - The Independent

Protesting Serbian Students Set 24-Hour Belgrade Blockade, Joined By Farmers, Others - Radio Free Europe / Radio Liberty

Russia wipes out three generations of a family in one strike - BBC.com

Trade war could erupt between US and EU over Trump’s threat to seize Greenland - WSWS

Trump ‘Serious as a Heart Attack’ About Launching Trade War With Canada and Mexico - The Daily Beast

Ukraine-Russia war latest: Charities in shock over Trump aid freeze as North Korea partially withdraws forces - The Independent

Zelenskiy Presses Ukraine’s Cause With Gathered World Leaders In Poland - Radio Free Europe / Radio Liberty

Themes around the World:

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FX liquidity and import compression

Foreign-exchange availability and rupee volatility continue to shape import licensing, payment timelines, and working-capital needs. Even with gradual reserve improvements, firms face episodic restrictions and higher hedging costs, affecting machinery, chemicals, and intermediate inputs critical to export supply chains.

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AI governance in retail finance

FCA’s call for input on AI’s long-term impact to 2030 signals reliance on outcome-based frameworks rather than new rules. Online investing firms must prove model governance, explainability and third‑party controls to deploy AI in advice, nudging and surveillance.

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EU compliance for XR biometrics

Immersive systems increasingly process eye-tracking and other biometric signals. In Finland, EU AI and data-protection compliance expectations shape product design, data localization and vendor selection, raising assurance costs but improving trust for regulated buyers in defence, healthcare and industry.

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Energy grid strikes, blackout risk

Russia’s intensified strikes on power plants, pipelines and cables have produced recurring outages and higher industrial downtime. The NBU estimates a 6% electricity deficit in 2026, shaving ~0.4pp off growth and raising operating costs, logistics disruption and force-majeure risk.

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Tariff refunds and cashflow uncertainty

With IEEPA tariffs invalidated, thousands of importers may seek refunds potentially totaling $160–$175bn, but courts must define processes and timelines (often 12–18+ months). Companies face liquidity planning challenges, liquidation deadlines, and uneven outcomes between large and small firms.

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External financing rollover dependence

Short-term bilateral rollovers (e.g., UAE’s $2bn deposit extended at 6.5% to April 2026) underscore fragile external buffers. Debt-service needs and refinancing risk can trigger FX volatility, capital controls, delayed profit repatriation, and higher country risk premia.

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Stablecoins become fiscal tool

US policy is positioning Treasury-backed stablecoins as a new buyer base for short-term bills and a lever of dollar reach. This may shift liquidity from bank deposits, alter credit availability, and create new compliance, treasury, and settlement models for multinationals.

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Tech export controls to China

Washington is tightening licensing and end-use monitoring for advanced AI chips and semiconductor tools destined for China, with strict Know-Your-Customer and verification terms. This elevates compliance costs, constrains China revenue, and accelerates supply-chain bifurcation in tech.

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Sanctions compliance and rerouting risks

Ongoing Russia-related sanctions and rising evidence of gray-market rerouting via third countries increase exposure for Japanese brands and distributors. Companies should tighten end-use checks, dealer controls, and trade-finance screening to avoid enforcement, reputational harm, and shipment seizures.

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Monetary easing amid sticky services

UK inflation fell to 3.0% in January while services inflation stayed elevated near 4.4%, keeping the Bank of England divided on timing of rate cuts. Shifting borrowing costs will affect sterling, financing, consumer demand, and capex planning.

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War-driven fiscal and labor strain

Bank of Israel estimates Gaza-war economic cost at ~352bn shekels (~$113bn), with defense outlays and reserve mobilization disrupting labor availability. Higher deficits and taxes risk tighter procurement, slower project timelines, and elevated country risk premiums for investors.

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Escalating US tariff regime

Average US import tariffs rose to about 13% in 2025 (from ~2.6% in 2024), with studies finding ~90–95% of costs borne domestically. Rapidly shifting sector tariffs (notably metals) heighten pricing volatility, contract risk, and sourcing reconfiguration.

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China trade frictions, tariffs

Anti-dumping measures on Chinese steel products and broader de-risking pressure increase retaliation risk against flagship exports (iron ore, agriculture, education). Importers face compliance and sourcing shifts; exporters should stress-test China exposure and diversify contracts and logistics routes.

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Tightening tech sanctions ecosystem

US and allied export controls and enforcement actions—illustrated by a $252m penalty over unlicensed shipments to SMIC—raise legal and operational risk for firms with China-facing semiconductor supply chains. Expect stricter end-use checks, routing scrutiny, and deal delays.

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Critical minerals weaponization risk

China’s dominance in rare-earth processing (often cited near 90%) and other critical inputs sustains leverage via export licensing and controls. Western countermeasures—stockpiles, price floors, and minerals blocs—raise structural fragmentation risk, driving dual sourcing, inventory buffers, and higher input costs.

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Tight fiscal headroom and tax risk

Economists warn the Chancellor’s budget headroom has already eroded despite about £26bn in tax rises, raising odds of further revenue measures. Corporate planning must factor potential changes to NI, allowances, subsidies, and public procurement priorities.

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Defense export surge and offsets

Korean shipbuilders and defense firms are competing for mega-deals (e.g., Canada’s submarine program, Saudi R&D cooperation). Large offsets and local-production demands can redirect capacity, tighten specialized supply chains, and create opportunities for foreign partners in co-production and sustainment.

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Multipolar payments infrastructure challenge

Growth in non-dollar payment plumbing—CBDCs, mBridge-type networks, and yuan settlement initiatives—incrementally reduces reliance on USD correspondent banking. Firms face fragmentation of rails, higher integration costs, and strategic decisions on invoicing currencies and liquidity buffers.

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Technology dependence and shortages

Despite ‘import substitution’ rhetoric, Russia remains reliant on high-tech imports; Chinese microchips reportedly supply ~90% of needs. Gaps persist in transport and industrial capabilities, raising risks of equipment shortages, degraded maintenance cycles, and unpredictable regulatory interventions to secure inputs.

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Energy security via LNG contracting

With gas around 60% of Thailand’s power mix and domestic supply shrinking, PTT, Egat, and Gulf are locking in 15-year LNG contracts (e.g., 1 mtpa and 0.8 mtpa deals starting 2028). Greater price stability supports manufacturers, but contract costs and pass-through remain key.

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Durcissement vis-à-vis de la Chine

Rapports publics et débats politiques évoquent un bouclier commercial, avec l’idée de droits de douane élevés pour contrer la concurrence chinoise (coûts 30–40% inférieurs). Les entreprises doivent anticiper contrôles, exigences d’origine, et tensions sur approvisionnements critiques.

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High-risk Black Sea shipping

Merchant shipping faces drone attacks, sea mines, GNSS jamming/spoofing, and sudden port stoppages under ISPS Level 3. Operational disruption and claims exposure rise for hull, cargo, delay, and crew welfare, complicating charterparty clauses, safe-port warranties, and routing decisions.

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Ports, logistics upgrades and new routes

Gwadar airport, free zone incentives (23‑year tax holiday; duty exemptions) and highway links aim to expand re-export and processing capacity, while Karachi seeks terminal cost rationalisation and new Africa sea routes. Execution quality will determine lead-time and cost improvements.

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Overseas fab expansion, new hubs

TSMC’s overseas expansion accelerates (e.g., 3‑nm production planned in Japan; Arizona build‑out). This diversifies supply but adds cross‑border operational complexity: talent mobility, export-control compliance, IP security, localization requirements, and potential duplication of critical suppliers and tooling.

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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.

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Taiwan as Asia asset-management hub

Regulatory reforms (50+ rule revisions; 38 new activities) are building Kaohsiung’s Asian Asset Management Center, attracting banks and insurers to pilot cross-border products. Improved market infrastructure may deepen local capital pools, aiding project finance, M&A, and treasury operations.

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District heating investment surge

City utilities are accelerating Wärmenetze expansion and modernization, including low‑temperature networks and large heat pumps. This drives major capex opportunities for foreign EPCs, pipe and insulation suppliers, and control-system vendors, but also heightens exposure to permitting delays and municipal procurement rules.

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Gargalos portuários e competição

Portos bateram 1,4 bi t em 2025 (+6,1%), mas Santos enfrenta risco de colapso sem expansão; o Tecon Santos 10 segue com disputas regulatórias e risco de judicialização. Atrasos elevam demurrage, perdas logísticas e confiabilidade de exportação/importação de cargas conteinerizadas.

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Climate law and carbon pricing momentum

Thailand is advancing a first comprehensive Climate Change Act, with carbon-pricing and emissions-trading elements discussed in public reporting. Exporters to the EU and other low-carbon markets will face rising MRV and product-footprint demands, influencing supplier selection and capex.

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China-linked FDI rules re-evaluation

India is reviewing Press Note 3 and may add a de minimis threshold to speed small-border-country investments while retaining scrutiny for sensitive sectors. This could reopen selective China capital and supplier participation, affecting JV structuring, procurement costs, and compliance with security reviews.

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Energy security and LNG contracting

Shrinking domestic gas output and delayed petroleum-law amendments increase reliance on LNG; gas supplies roughly 60% of power generation. PTT, Egat and Gulf are locking long-term LNG deals (15-year contracts, 0.8–1.0 mtpa). Electricity-price volatility and industrial costs remain key.

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Foreign investment screening delays

FIRB/treasury foreign investment approvals remain slower and costlier, increasing execution risk for M&A and greenfield projects. Business groups report unpredictable milestones and missed statutory timelines, while fees have risen sharply (e.g., up to ~A$1.2m for >A$2bn investments), affecting deal economics.

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Taiwan tensions and operational contingency

Taiwan remains a core flashpoint in U.S.–China relations, elevating tail risks for shipping, semiconductors and insurance. Recent leader-level discussions paired trade asks with warnings on arms sales. Companies should stress‑test logistics, inventory buffers, and contractual force‑majeure exposure for escalation scenarios.

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Defense spending gridlock and procurement

A roughly US$40B multi‑year defense plan is stalled in parliament, risking delays to U.S. Letters of Offer and Acceptance and delivery queues. Uncertainty around air defense, drones and long‑range fires investment affects investors’ risk pricing and operational resilience planning.

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Treasury demand and credibility strain

Reports of Chinese regulators urging banks to curb US Treasury buying, alongside elevated issuance, steepen the yield curve and raise term premia. Higher US rates lift global funding costs, hit EM dollar borrowers, and reprice project finance and M&A hurdles.

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Red Sea and Suez volatility

Shipping disruptions tied to Houthi threats against Israel-linked vessels continue to reshape routing and costs. Even as some carriers test Suez returns, renewed escalation risks keep freight rates, lead times, and inventory buffers volatile for Asia–Europe supply chains.