Mission Grey Daily Brief - February 01, 2025
Summary of the Global Situation for Businesses and Investors
The global situation is currently dominated by President Trump's tariff threats against Canada, Mexico, and China, which have raised concerns among businesses and investors due to the potential economic impact and disruption of supply chains. Meanwhile, the Ukraine-Russia war continues to be a major geopolitical concern, with Russian forces intensifying their offensive and Ukrainian forces launching drone attacks on Russian oil refineries. Additionally, India and Trump's power moves could destabilize Pakistan and supercharge the Taliban's nuclear ambitions. These developments have significant implications for businesses and investors, requiring careful consideration and strategic decision-making.
Trump's Tariff Threats
President Trump's tariff threats against Canada, Mexico, and China have raised concerns among businesses and investors due to the potential economic impact and disruption of supply chains. The tariffs are aimed at addressing issues such as illegal immigration and the smuggling of fentanyl, but they could also lead to higher prices for consumers and disrupt key industries. Canada and Mexico have expressed their readiness to respond, potentially triggering a wider trade conflict. China has responded aggressively to previous tariffs, and Korean companies are also worried about the impact on their investments in the U.S.
Ukraine-Russia War
The Ukraine-Russia war continues to be a major geopolitical concern, with Russian forces intensifying their offensive and Ukrainian forces launching drone attacks on Russian oil refineries. The strategically important city of Pokrovsk is under threat, and its capture could significantly bolster Russia's offensive capabilities. Western companies are eager to return to Russia if a ceasefire is brokered, but legal and reputational risks remain high.
India and Trump's Power Moves
India and Trump's power moves could destabilize Pakistan and supercharge the Taliban's nuclear ambitions. Trump's return to power and India's recent courting of the Taliban have increased tensions in the region. Pakistan, a key hub for China's investment strategy, is facing political unrest and economic challenges, making it vulnerable to the Taliban's influence. Trump's focus on countering China's rise and ending America's 'forever wars' could further complicate the situation.
Impact on Businesses and Investors
The tariff threats and the Ukraine-Russia war have significant implications for businesses and investors. Tariffs could disrupt supply chains and increase costs, while the war has created geopolitical uncertainty and affected energy markets. Businesses with operations in the affected countries should monitor the situation closely and consider contingency plans. Investors should evaluate the potential impact on their portfolios and adjust their strategies accordingly.
Further Reading:
Forget ESG – Western Firms Will Rush Back to Russia When War Ends - The Moscow Times
High Stakes for Global Companies in Trump’s Latest Tariff Threats - The New York Times
Russian Forces Push Toward Pokrovsk, Capture Novovasylivka - Newsweek
Trump 2.0 and the Debilitating, Discharging, and Devitalizing of Korean Companies - The Diplomat
Themes around the World:
Regional Funding and Infrastructure Gaps
Persistent underinvestment and complex funding formulas, especially in Wales and the North, continue to hinder infrastructure upgrades. Businesses face challenges in logistics, labour mobility, and regional development, with new government strategies aiming to address disparities.
Energy Revenue Decline Strains Budget
Russia’s oil and gas revenues fell 24% in 2025, hitting a five-year low and driving a record budget deficit of 2.6% of GDP. Lower prices, sanctions, and Ukrainian attacks undermine fiscal stability, pressuring government spending and increasing economic uncertainty for investors.
Escalating US-Mexico Security Tensions
US threats of military action against Mexican drug cartels, coupled with recent interventions in Venezuela, have raised geopolitical risk. Mexico firmly rejects intervention, but persistent US pressure and rhetoric could impact investor confidence, cross-border operations, and regional stability.
Resilient Economic Growth Trajectory
India’s GDP is projected to grow 7.5-7.8% in FY26, outpacing major economies and underpinned by strong domestic demand, services, and policy reforms. Growth is expected to moderate slightly in FY27 due to a high base and global uncertainties, but fundamentals remain robust.
Safeguard Tariffs on Textile Imports
The government has imposed three-year safeguard tariffs on imported woven cotton fabric to protect domestic producers from import surges. This policy will impact global supply chains, requiring international businesses to reassess sourcing and market entry strategies.
US-China Relations Remain Volatile
Ongoing tensions and policy reversals in US-China economic relations continue to disrupt trade flows, investment decisions, and technology transfers. Businesses face persistent risk from tariffs, regulatory changes, and unpredictable bilateral negotiations.
Political Volatility: Snap Election Gamble
Prime Minister Sanae Takaichi’s dissolution of parliament and snap election on February 8 introduces significant policy uncertainty. The outcome will shape Japan’s fiscal, trade, and security strategies, with potential shifts in economic stimulus, tax policy, and regional diplomacy.
Financial Market Reforms and Currency Stability
The government’s aggressive measures to curb capital outflows and strengthen the Korean won, including foreign reserve deployment and tax incentives for foreign investors, are restoring market confidence. These reforms are crucial for financial resilience and attracting long-term investment.
Foreign Portfolio Investment Volatility
After record FPI outflows of USD 17.5 billion in 2025, foreign investors are expected to return in 2026 amid improved earnings and macro stability. However, India’s limited AI production capacity may divert global capital to more AI-exposed markets, affecting sectoral investment flows.
EU Tightens Oil Price Cap Measures
The European Union will lower the Russian oil price cap to $44.1 per barrel from February 2026, intensifying restrictions on Russian crude and refined products. Russia has responded with export bans under price cap contracts, further complicating global energy supply chains and compliance for international traders.
Trade Policy Uncertainty and Export Risks
Geopolitical tensions, sanctions on Russia, and trade disputes with the US have weakened external demand for German goods. Exporters face ongoing uncertainty, especially in automotive and machinery sectors, complicating supply chain planning and global market strategies.
EU Accession and Regulatory Reform
Ukraine’s progress towards EU membership is tied to reforms in governance, anti-corruption, and economic policy. EU integration promises a more predictable regulatory environment for investors but requires sustained compliance and institutional strengthening.
Stagnant Manufacturing Competitiveness
Thailand’s manufacturing sector, especially automotive and electronics, faces declining output and competitiveness. Despite increased FDI, the country struggles to move up the value chain, risking long-term industrial stagnation and reduced attractiveness for high-tech investment.
Structural Financial System Constraints
Pakistan’s financial system is dominated by government borrowing, crowding out private sector credit. With Rs 37 trillion in public debt exceeding banking deposits, exporters and manufacturers face high borrowing costs, stifling industrial growth and undermining export competitiveness.
Infrastructure Megaprojects Drive Growth
Large-scale projects such as NEOM and Red Sea developments are reshaping Saudi Arabia’s business landscape, creating opportunities in construction, tourism, logistics, and technology. However, project execution risks and regulatory changes require vigilant risk management for global partners.
Major Infrastructure Bottlenecks and Delays
Canada faces critical infrastructure gaps and slow project approvals, with over $126 billion in housing-enabling infrastructure at risk and complex regulatory hurdles. These delays undermine competitiveness, impede supply chain resilience, and deter both domestic and foreign investment in key sectors.
Humanitarian Crisis Drives Regulatory Scrutiny
The deepening humanitarian crisis in Gaza, exacerbated by border closures and military actions, has triggered international concern and calls for regulatory intervention. Businesses face reputational and operational risks, with potential for new sanctions, compliance requirements, and heightened scrutiny of activities linked to the conflict.
Deepening Turkey–UK and EU Trade Relations
Turkey’s trade with the UK hit $24 billion, with ambitions for $40 billion. EU trade reached $233 billion. Ongoing negotiations to expand free trade agreements into services and investment are set to further integrate Turkey into European supply chains.
Geopolitical Tensions With China Escalate
Japan faces heightened diplomatic and economic tensions with China, including export controls on rare earths and dual-use items. These frictions, triggered by Japan’s pro-Taiwan stance, threaten supply chains for high-tech and automotive sectors, raising operational risks for international businesses.
Rising Role in Global Supply Chains
Indonesia is capturing a growing share of global supply chains as U.S.-China trade declines, with Indonesian imports to the U.S. rising 34% in 2025. This shift enhances Indonesia’s position as a sourcing hub, attracting investment and diversifying global manufacturing.
Political Risk and Regulatory Uncertainty
Proposed amendments to Taiwan’s Offshore Islands Construction Act could allow local governments to negotiate directly with China, raising national security concerns and regulatory uncertainty for foreign investors, especially in Kinmen and Matsu special zones.
Macroeconomic Stabilization and Investor Confidence
The Egyptian pound has appreciated, inflation slowed to 12.3%, and remittances rose 42.5% to $37.5 billion. These improvements, alongside rising FDI and portfolio inflows, reflect cautious optimism but remain vulnerable to external shocks and reform momentum.
Surge in Foreign Direct Investment
India attracted $51 billion in FDI over six months, driven by manufacturing incentives, start-up growth, and pro-investment reforms. FDI is critical for infrastructure and industrial expansion, reinforcing India’s status as a preferred global investment destination despite some repatriation and external volatility.
Broader Regional Economic Realignment
China’s selective engagement with South Korea and other regional actors amid Japan tensions signals a shifting economic landscape. Businesses must navigate evolving alliances, trade blocs, and competitive pressures across East Asia.
Climate Policy and Emissions Targets
Germany met its 2025 climate target but with only a 1.5% emissions reduction. The country risks missing future goals, facing potential €34 billion in emission rights costs, affecting energy-intensive industries and investment in sustainable operations.
Shadow Fleet Enables Oil Exports
To circumvent sanctions and price caps, Russia employs a 'shadow fleet' of old tankers, shell companies, and non-Western insurers, maintaining oil exports above price caps. This parallel system heightens risks of regulatory breaches, insurance gaps, and environmental incidents for global traders.
Strategic Expansion of Gas Infrastructure
Brazil is investing hundreds of millions of dollars in new pipelines, LNG terminals, and storage to secure domestic gas supply, reduce reliance on imports, and support industrial growth. Projects like TAG, SEAP, and GASOG are critical for energy security, especially amid declining Bolivian imports and rising pre-salt production.
Widespread Protests and Political Instability
Mass protests driven by economic hardship and political repression have spread nationwide, resulting in hundreds of deaths. The risk of regime change or violent crackdowns creates extreme uncertainty for investors, supply chains, and operational continuity.
Tariff Policy Drives Supply Chain Shifts
The US maintains an aggressive tariff regime, especially against China, driving sourcing shifts to Southeast Asia and legal challenges to tariff authority. Businesses must adapt to a new baseline of higher costs, regulatory complexity, and supply chain reconfiguration.
Digital Governance Accelerates Project Delivery
India’s PRAGATI platform has resolved over 2,950 governance and infrastructure issues, expediting large-scale projects and reducing bureaucratic delays. This digital governance model improves inter-agency coordination, enhancing the ease of doing business and project execution timelines.
Major Infrastructure and Logistics Expansion
Record infrastructure investment, especially in transport and logistics, is transforming states like Uttar Pradesh and Madhya Pradesh into key hubs. Platforms like PRAGATI enable efficient project execution, reducing bottlenecks and enhancing India’s competitiveness as a manufacturing and export base.
Sanctions, Trade Restrictions, and Asset Freezes
Sanctions on Russia and the ongoing debate over unlocking frozen Russian assets for Ukraine’s reconstruction create a complex environment. Trade restrictions, compliance risks, and evolving sanctions regimes directly affect multinational operations and cross-border transactions.
Hamas Disarmament and Security Dilemmas
The demilitarization of Hamas remains a central, unresolved issue. US and Israeli insistence on full disarmament is met with resistance, and the lack of clear enforcement mechanisms heightens the risk of renewed conflict, affecting supply chains, insurance costs, and investment planning.
Sanctions Enforcement Expands Globally
US sanctions enforcement has intensified, targeting entities and behaviors beyond traditional lists. Secondary sanctions, especially related to Iran and Russia, are increasingly used, raising compliance risks for multinationals and complicating cross-border transactions and supply chains.
US Tariffs and Trade Diversification
Recent US tariffs on Brazilian goods highlighted the risks of concentrated trade relationships. Brazil is intensifying efforts to diversify export markets, including the EU, Southeast Asia, and Canada, to reduce vulnerability and ensure stable growth in international trade.
Investment Bottlenecks and EEC Land Issues
Land shortages and outdated zoning regulations in the Eastern Economic Corridor (EEC) delay industrial projects and deter foreign investment. The government is fast-tracking reforms, but infrastructure and regulatory bottlenecks remain significant barriers to scaling up high-value manufacturing and technology clusters.