Mission Grey Daily Brief - January 30, 2025
Summary of the Global Situation for Businesses and Investors
The world is witnessing a new era of Trump, with the second administration of President Donald Trump beginning in the United States on January 20, 2025. Trump's campaign slogan, "Make America Great Again (MAGA)," signifies a focus on revitalizing the domestic economy and maximizing American economic interests by ceasing to act as "the world's policeman" and reconstructing "American hegemony." This has led to a shift in global circumstances, with China and Russia viewed as critical issues and potential threats. Trump's unpredictable negotiation-focused approach has raised questions about international society's reaction and China's engagement with it.
Trump's Second Term and its Global Implications
The Trump administration has designated China as the greatest threat, citing Beijing's long-term and strategic pursuit of global hegemony by 2049. Xi Jinping's "100-year plan" aims for "The Great Rejuvenation of the Chinese Nation", surpassing other countries economically and militarily. China's Belt and Road Initiative is expanding in Asia, Africa, and South America, constructing an independent economic system for military superiority. China's domestic economy shows signs of slowing down, but its focus on innovation suggests continued near-term expansion.
Trump's negotiation-focused approach is highly unpredictable, making it difficult to forecast international society's reaction and China's engagement with it. Some countries may strengthen ties with the U.S. based on economic interests, while others may experience cooling relationships. Withdrawal from multilateralism and divergence from internationally agreed "rule-based governance" are anticipated, particularly on issues like Palestine and climate change.
Rising Tensions in the Middle East and Asia
The West's victory in the Israel-Iran conflict, centred on Gaza, has demonstrated the U.S. and its allies' ability to prevail while managing multiple conflicts, including the Russia-Ukraine War and the Israel-Hamas War. This capability to mobilise and deploy vast political, economic, military, and intelligence assets has prompted a major attitudinal shift among key Middle Eastern powers, such as Saudi Arabia and the U.A.E. New agreements for Western firms in Iraq indicate a potential shift in regional dynamics.
Trump's Aggressive Stance on Immigration and its Impact on Latin America
Trump's standoff with Colombia over migrant deportations has sent ripples through Latin America, with Colombia ultimately conceding to U.S. demands. This aggressive posture and willingness to weaponize immigration and tariffs threaten regional economic balance and erode trust in U.S.-Latin American relations. Left-leaning governments advocating for policies misaligned with Washington's priorities may face heightened scrutiny and pressure. Smaller economies reliant on U.S. trade and investment are at high risk, and some countries may be pushed to strengthen ties with U.S. competitors like China and Russia.
Red Sea Shipping Route Disruptions
An explosion on a Hong Kong-flagged container ship in the Red Sea has forced the crew to abandon the vessel, sparking a major fire. The Red Sea is a crucial route for energy shipments and cargo between Asia and Europe, with $1 trillion worth of trade passing through annually. Houthi attacks have halved the number of ships using the route, and shippers are avoiding it due to risks, despite Houthi pledges to limit assaults. This disruption has significant implications for global trade and supply chains.
Further Reading:
Does A Rush Of New Agreements Mean The West Is Regaining Its Influence In Iraq - OilPrice.com
Explosion forces crew to abandon Hong Kong-flagged container ship in the Red Sea - The Independent
How a trade war and U.S. tariffs could hit Canada’s housing market - Global News Toronto
The U.S.-China Struggle and Japan's Strategic Direction - 笹川平和財団
What Hegseth thinks of Russia and China as he takes the Pentagon reins - Axios
Themes around the World:
Central bank pivot and rate path
The Bank of Thailand is shifting from rate-only signalling toward broader measures targeting productivity and inequality, while maintaining accommodative policy. Analysts expect a possible cut toward 1.00% in early 2026. Lower rates help borrowers but may not revive investment without reforms.
USMCA review and North America
The approaching USMCA review is heightening risk for automotive, agriculture, and manufacturing flows across the US–Canada–Mexico corridor. Threatened tariffs and rules-of-origin pressures incentivize nearshoring but complicate cross-border planning, inventory placement, and long-term supplier commitments.
Alliance rebalancing and security posture
US strategy signals greater Korean responsibility for deterring North Korea, with discussions on wartime OPCON transfer and cooperation on nuclear-powered submarines. A shifting force posture can affect political risk perceptions, defense procurement, technology transfer, and resilience planning for firms operating in Korea.
Strait of Hormuz security risk
Rising U.S.–Iran tensions and tanker incidents increase the probability of disruption in the Strait of Hormuz. Even without closure, higher war-risk premia, rerouting, and convoying can inflate logistics costs, tighten energy supply, and disrupt just-in-time supply chains regionally.
Rising antitrust pressure on tech
U.S. antitrust enforcement is intensifying across major digital and platform markets, affecting dealmaking and operating models. DOJ is appealing remedies in the Google search monopoly case; FTC expanded an enterprise software/cloud probe into Microsoft bundling and interoperability; DOJ also widened scrutiny around Netflix conduct.
Border trade decentralization measures
Tehran is delegating exceptional powers to border provinces to secure essential imports via simplified customs and barter-style mechanisms. This may improve resilience for basic goods but increases regulatory fragmentation, corruption exposure, and unpredictability for cross-border traders and distributors.
تعافي قناة السويس وأمن البحر الأحمر
عودة تدريجية لبعض خدمات الحاويات عبر البحر الأحمر وقناة السويس تقلّص أزمنة العبور بعد تراجع الحركة بنحو 60% منذ 2023. استمرار المخاطر الأمنية يرفع التأمين ويُبقي قابلية عكس المسارات عالية، ما يؤثر في موثوقية الجداول وتكاليف الشحن.
Surge in Foreign Direct Investment
FDI inflows to India rose 73% to $47 billion in 2025, driven by services and manufacturing. Sustaining this growth requires policy stability, targeted reforms, and improved ease of doing business, as global volatility and competition from Vietnam and Malaysia intensify.
China engagement and investment scrutiny
Ottawa’s diversification push toward China—alongside signals of openness to Chinese SOE energy stakes—raises national-security review, reputational and sanctions-compliance risk. Businesses should expect tighter due diligence and potential policy reversals amid allied pressure.
Aranceles y reconfiguración automotriz
Aranceles de EE. UU. y peticiones de México para reducir tasas a autos no conformes con T‑MEC presionan exportaciones. Cierres/ajustes de plantas y potencial compra por BYD/Geely muestran reconfiguración; sube el escrutinio sobre “backdoor” chino y el riesgo de medidas.
Durcissement sanctions UE Russie
L’UE prépare un 20e paquet de sanctions: interdiction de services maritimes pour pétrole russe, ajout de navires “shadow fleet”, restrictions bancaires et crypto, nouvelles interdictions d’import/export. Impacts: due diligence, shipping/assurance, énergie, chaînes matières.
Treasury market liquidity drains
Large Treasury settlements and heavy auction calendars can pull cash onto dealer balance sheets, reducing liquidity elsewhere. Tightened repo and margin dynamics raise volatility across risk assets, complicate collateral management, and increase the chance of disruptive funding squeezes for corporates.
Critical Minerals Supply Chain Focus
France, as G7 president, prioritizes international cooperation to secure and diversify critical minerals supply chains. This strategic shift, essential for the energy transition, will influence investment in mining, metallurgy, and advanced manufacturing sectors.
Aggressive antitrust and M&A scrutiny
FTC/DOJ enforcement remains assertive, with close review of platform, AI, and “acquihire” deals plus tougher merger analysis. Cross-border buyers face longer timelines, higher remedy demands, and greater deal-break risk, affecting investment planning, partnerships, and exit strategies.
Defense build-up reshapes industry
La hausse des crédits militaires (+6,5 à +6,7 Md€, budget armées ~57,2 Md€) accélère commandes (sous-marins, blindés, missiles) et renforce exigences de conformité, sécurité et souveraineté. Opportunités pour fournisseurs, mais arbitrages budgétaires pèsent sur autres programmes d’investissement.
Cyber defense and compliance tightening
Japan is strengthening “active cyberdefense” institutions and pushing tougher security expectations, including in financial and critical infrastructure segments. Multinationals should anticipate higher incident-reporting, supplier security audits, and operational resilience requirements across Japan-based networks.
Currency management and capital shifts
The yuan has strengthened toward multi‑year highs, but authorities are signaling caution to avoid rapid appreciation. Reports of guidance to curb bank U.S. Treasury exposure align with reserve diversification and yuan internationalization, affecting FX hedging costs, repatriation strategy, and USD funding assumptions.
US tariff volatility, autos exposure
Washington’s surprise move to lift “reciprocal” tariffs to 25% (from 15%) on Korean autos, lumber and pharma heightens policy risk. Autos are ~27% of Korea’s US exports; firms may accelerate US localization, reroute supply chains, or hedge pricing.
استقرار النقد والتضخم والسياسة النقدية
الاحتياطيات سجلت نحو 52.59 مليار دولار بنهاية يناير 2026، مع تباطؤ التضخم إلى قرابة 10–12% واتجاه البنك المركزي لخفض الفائدة 100 نقطة أساس. تحسن الاستقرار يدعم الاستيراد والتمويل، لكن التضخم الشهري المتذبذب يبقي مخاطر التسعير والأجور مرتفعة.
BOJ tightening and funding costs
Hawkish BOJ commentary and markets pricing a high probability of further hikes raise borrowing costs and reprice JGB curves. This shifts project hurdle rates, M&A financing, and real-estate assumptions, while potentially stabilizing the yen over time.
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.
UK–EU border frictions endure
Post‑Brexit customs and SPS requirements, the Border Target Operating Model, and Northern Ireland arrangements continue to reshape UK–EU flows. Firms face documentation risk, delays, and higher logistics overheads, driving route diversification, inventory buffers, and reconfiguration of distribution hubs serving EU markets.
Cross-border infrastructure politicization
U.S. threats to delay or condition opening of the Gordie Howe International Bridge add uncertainty to the Detroit–Windsor trade corridor, a major freight gateway. Any disruption would hit just‑in‑time automotive, manufacturing and agri-food logistics.
Volatile US rate-cut expectations
Markets are highly sensitive to clustered US labor, retail, and CPI releases, with shifting expectations for 2026 Fed cuts. Exchange-rate and financing-cost volatility impacts hedging, M&A timing, inventory financing, and emerging-market capital flows tied to US dollar liquidity.
FX regime and pricing pass-through
Authorities emphasize market-driven FX and inflation targeting, reducing reliance on defending a specific rate. For investors and traders, this improves transparency but raises short-term earnings and contract risks via exchange-rate volatility, repricing cycles, and hedging costs.
Oil and gas law overhaul
Indonesia is revising its Oil and Gas Law, including plans for a Special Business Entity potentially tied to Pertamina and a petroleum fund funded by ~1–2% of upstream revenue. Institutional redesign and fiscal terms could shift PSC governance, approvals, and investment attractiveness.
Foreign Direct Investment Surges Amid Reforms
FDI in Saudi Arabia rose 10% to $280 billion by Q3 2025, reflecting regulatory reforms and incentives targeting $100 billion annual FDI by 2030. The Kingdom’s efforts to attract long-term foreign capital are reshaping ownership, partnership, and market entry strategies for global investors.
Defense Industry Privatization and Growth
Israel’s defense sector is undergoing privatization, with major IPOs planned for Israel Aerospace Industries and Rafael. Rising global demand for Israeli defense technology, especially in Europe, is boosting exports and cross-border partnerships, reshaping investment strategies.
Foreign Investment Faces High Uncertainty
Foreign direct investment in Ukraine remains subdued, with FDI at only 0.9% of GDP in late 2025. Investors are cautious due to security risks, regulatory instability, and infrastructure damage, though reconstruction initiatives offer selective opportunities for risk-tolerant capital.
مسار صندوق النقد والإصلاحات
مراجعات برنامج صندوق النقد تركز على الانضباط المالي، توسيع القاعدة الضريبية، وإدارة مخاطر المالية العامة. التقدم أو التعثر ينعكس مباشرة على ثقة المستثمرين، تدفقات العملة الأجنبية، وتوافر التمويل، مع حساسية اجتماعية قد تؤخر قرارات تحرير الأسعار والدعم.
Port labor and automation tensions
East/Gulf Coast port labor negotiations and disputes over automation remain a recurring tail risk for U.S. logistics. Even with tentative deals, threats of slowdowns or strikes can disrupt ocean schedules, raise demurrage, and push costly rerouting toward West Coast or air freight.
Targeted Sectoral Trade Actions
Beyond country tariffs, the U.S. is signaling sector-focused measures (autos, steel/aluminum, aerospace certification disputes) that can abruptly disrupt specific industries. Companies should expect episodic shocks to cross-border flows, inventory strategy, and after-sales service for regulated products.
Economic-security industrial policy expansion
Tokyo is using subsidies and “economic security” framing to steer strategic sectors (chips, AI, defense-linked tech). This can crowd-in foreign investment and partnerships, but increases compliance complexity around sensitive technologies and state-aid conditions.
Saudization and workforce constraints
Saudi Arabia is tightening localization rules, restricting expatriates from certain senior and commercial roles and raising Saudization ratios in sales/marketing. Multinationals must redesign org charts, compensation, and compliance processes, increasing operating costs and talent-transition risk.
US-linked investment and credit guarantees
Taiwan’s commitment to roughly US$250bn of investment in the US, backed by up to US$250bn in credit guarantees, will redirect corporate capital planning. It may accelerate supplier localization in North America while raising financing, execution, and opportunity-cost considerations at home.
Tighter inbound investment screening
CFIUS scrutiny is broadening beyond defense into data-rich and “infrastructure-like” assets, raising execution risk for cross-border M&A and minority stakes. Investors should expect longer timelines, mitigation demands, and valuation discounts for sensitive data, education, and tech targets.