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:
India FTA talks accelerate
India and Israel are preparing a second round of free trade agreement negotiations after initial talks covered goods, services, customs, investment, IP, and technology sectors. With bilateral merchandise trade at $3.62 billion in FY25, firms could gain improved market access.
Energy security supply-chain resilience
Australia and India explicitly linked deeper energy trade to supply-chain resilience, citing Middle East disruptions affecting commodity flows and prices. Continued trade in LNG, coal, diesel and liquid fuels, alongside low-carbon fuels, matters for importers, shippers and energy-intensive industrial operators.
USMCA Renegotiation Creates Investment Uncertainty
The US refused simple renewal of USMCA, triggering a ten-year review mechanism. Trump imposed 50% tariffs on Canadian imports using unprecedented Section 338 authority. Rules of origin, US-content requirements, and anti-China 'Fortress North America' proposals remain unresolved.
Sanctions Policy Balances Dollar Dominance Concerns
A proposed mandatory Russia sanctions bill creates tension with the administration's concern that overuse of financial warfare erodes dollar supremacy. Treasury is modernizing sanctions while expanding swap lines to preserve dollar dominance, as heavily sanctioned countries shift notably toward China's renminbi.
US-Iran Conflict Disrupts Global Energy Markets
Escalating US-Iran hostilities around the Strait of Hormuz have slashed oil transit flows from 9.4 to 5.5 million barrels daily, pushing Brent above $91. Prolonged disruption threatens energy-intensive supply chains, fuels inflation, and constrains global economic growth.
Trilateral SMR Export Alignment
South Korea, the United States, and Japan signed an agreement to support joint small modular reactor deployment in the Indo-Pacific. The partnership strengthens nuclear supply-chain coordination, export opportunities, and energy-security positioning while increasing competitive pressure on Chinese and Russian suppliers.
Tighter foreign investment screening
UK authorities are applying the National Security and Investment Act more aggressively, including the first outright block of a Chinese-linked acquisition. Reviews increasingly cover AI, semiconductors, communications and data-rich infrastructure, raising execution risk, compliance costs and deal-timing uncertainty for investors.
Infrastructure reform backed financing
South Africa secured a $1.5 billion World Bank loan to support reforms in electricity, water, sanitation and freight transport. Favorable 15-year terms with a three-year grace period should help infrastructure upgrades, but delivery will determine logistics reliability and investor confidence.
Election-sensitive regulatory timing
European officials explicitly linked proposed trade measures to Israel’s upcoming election cycle, with some accusing the Commission of delaying action. For investors and multinational operators, this creates event-driven policy volatility, where regulatory outcomes may shift quickly with changing political calculations in Brussels and Jerusalem.
Tourism expansion and formalization
Tourism arrivals rose 4% in the first half, while authorities are preparing a new investment platform for 2027, expanding hotel capacity and regulating holiday homes. Digital marketing partnerships and aviation incentives support growth, with implications for hospitality investment, transport demand and regional services.
Alternative sea lanes prioritized
Tokyo is funding 2 billion yen to chart five Southeast Asian straits with Indonesia and the Philippines, aiming to protect maritime routes for energy and goods. The initiative highlights growing business concern over chokepoint exposure, Taiwan contingencies and shipping resilience.
Malaysia border logistics improve
Thailand and Malaysia opened the new Sadao-Bukit Kayu Hitam border link with modern screening, multiple cargo lanes and longer operating hours. Officials said it should reduce congestion, speed clearance and support a bilateral trade target of US$30 billion by 2027.
Iran War Disrupts Energy Supply Chains
Five-month US-Iran conflict has closed the Strait of Hormuz, pushing oil above $90/barrel and gasoline past $4/gallon. Houthi Red Sea blockades compound disruptions, threatening 20% of global seaborne oil transit and raising inflation across all economic sectors.
Franco-German industrial protection push
Berlin and Paris are negotiating a broader industrial bargain linking stricter “Made in Europe” procurement and subsidy rules with support for Europe’s auto sector. The outcome could alter eligibility for public contracts, localization incentives and cross-border investment strategies across the EU.
EU clean trade partnership
South Africa and the EU advanced their Clean Trade and Investment Partnership around green hydrogen, critical minerals, sustainable fuels and grid expansion. With 2025 trade at €45 billion and the EU supplying over 40% of FDI, implementation could materially reshape export, sourcing and project-finance decisions.
Shadow fleet logistics under strain
The EU added 41 vessels, taking sanctioned shadow-fleet ships above 670, and for the first time targeted bunkering and service vessels. This raises freight, insurance and enforcement risks across Russian crude exports, maritime routing, port calls and shipping intermediaries.
CUSMA renegotiation uncertainty deepens
The U.S. refusal to renew CUSMA on current terms has shifted the pact into annual reviews through 2036, while both sides intensify negotiations. This prolongs policy uncertainty around rules of origin, market access, and North American investment decisions.
Exemptions protect key supply chains
More than 2,100 products were reportedly exempted, including beef, coffee, orange juice, energy products, rare earths, and aircraft parts, to avoid shortages and supply-chain disruption. These carve-outs cushion immediate damage, but create uneven sectoral exposure and portfolio concentration risks for exporters.
Escalating sovereign debt pressures
France’s public debt has exceeded €3.5 trillion, around 117.5% of GDP, while annual interest costs reached €66 billion and could exceed €100 billion by 2029. Rising refinancing costs and market volatility increase funding risk, potentially affecting investor sentiment, taxes, and public investment capacity.
Brazil Action Signals Template
The 25% tariff on many Brazilian imports is the first major use of the administration’s redesigned trade strategy after legal setbacks. It signals a scalable template for country-specific action, increasing exposure for exporters, importers, and multinational procurement networks.
Russia Sanctions Reshape Trade
The EU’s 21st sanctions package expands restrictions on Russian banks, crypto platforms, shadow-fleet vessels, refineries, ports, and oil traders, increasing compliance burdens and enforcement risks for firms operating in regional finance, shipping, energy trading, and dual-use supply chains linked to Ukraine.
China digital economy push
Pakistan and China agreed to deepen collaboration in artificial intelligence, the digital economy, and science and technology, while Pakistan joined the new WAICO framework. For investors, this signals regulatory and infrastructure support for technology sectors, but also a stronger China-centered standards environment.
US trade deal momentum
Pakistan and the United States made significant progress toward a reciprocal trade agreement covering tariff adjustments, market access, and investment cooperation. With the US remaining Pakistan’s largest single-country export market, an early deal could materially reshape export competitiveness and bilateral sourcing decisions.
External Market Access Diplomacy Broadens
Egypt is using diplomatic outreach to deepen trade and logistics partnerships, including transport, electricity and renewables agreements with Tanzania and a ports cooperation memorandum with Montenegro. These moves may support export diversification, African market access and maritime connectivity over time.
Critical minerals investment opening
Recent US-Ukraine minerals arrangements are elevating critical raw materials, oil, and gas as strategic investment sectors. Ukraine has begun releasing reserve data to attract investors, while retaining state ownership and channeling 50% of revenues from new resource projects into reconstruction.
Further tariff risk remains
Brazil was also cited in a separate U.S. forced-labour-related Section 301 investigation that could add 12.5 percentage points, lifting total tariff exposure to 37.5%. That possibility materially increases downside risk for contracts, margins, export competitiveness and medium-term investment planning tied to the U.S. market.
US-China AI Technology Rivalry Intensifies
The U.S. accused Chinese AI startup Moonshot of stealing Anthropic's proprietary model through distillation, with Treasury Secretary Bessent considering sanctions and trade blacklisting. This escalation—amid planned September AI talks and Xi's White House visit—threatens further tech decoupling and investment uncertainty.
Forced-labor import ban overhaul
Israel approved a ban on goods made wholly or partly with forced labor and will build an enforcement mechanism within 90 days. The reform aims to improve trade conditions, reduce barriers for exporters, and align Israeli supply chains with stricter international standards.
México mantiene atractivo inversionista
Aunque el entorno comercial es más incierto, México recibió cerca de US$41.000 millones de IED en 2025, un alza de 10,8%, y se ubicó décimo mundial. La resiliencia macro y la integración con Estados Unidos siguen respaldando decisiones de largo plazo.
Franco-German defense reset
France and Germany are rebuilding defense cooperation after the FCAS fighter setback, focusing on missiles, long-range strike, radar and cloud systems. This supports defense and dual-use industry opportunities, but project disputes still create uncertainty for procurement, partnerships and industrial planning.
US Tariffs Hit Exports
Washington imposed a 12.5% tariff on Australian goods from July 24 after a forced-labour investigation, despite Canberra’s objections and modern-slavery laws. The move raises costs for exporters, complicates US market access, and may force supply-chain due diligence and market diversification.
Complex alternative routing logistics
To keep crude moving, Saudi Arabia is exploring intricate workarounds involving the Suez Canal, Egypt’s Sumed pipeline, and possibly other Mediterranean links. These options are feasible but logistically cumbersome, capacity-constrained, and materially more expensive for refiners, traders, and shippers.
Steel manufacturing joint venture
A strategic venture between India’s SAIL and Indonesia’s PT Krakatau Steel will explore a stainless-steel slab facility in Indonesia. The initiative points to deeper local manufacturing capacity, technology transfer and stronger regional inputs for construction, industrial equipment and automotive supply chains.
Regional devolution and infrastructure push
The new administration is prioritising decentralisation, regional investment, housing, transport, and industrial policy through a proposed ‘Number 10 North’. Businesses may see more subnational decision-making, place-based incentives, and uneven regulatory or procurement dynamics across UK regions and devolved administrations.
Sabang port logistics revival
Indonesia and India agreed to revive joint development of Sabang Port near the Strait of Malacca, less than 100 nautical miles from India’s Nicobar Islands. The project could strengthen shipping connectivity, regional logistics resilience, maritime services and trade flows through a critical global chokepoint.
China-plus-one inflows strengthen
Vietnam remains a leading beneficiary of production and capital relocating from China, supported by geographic proximity, lower labor costs and broad FTA coverage. Reported export gains to the US and rising ASEAN-bound investment reinforce its role in regional diversification strategies.