Mission Grey Daily Brief - February 03, 2025
Summary of the Global Situation for Businesses and Investors
The global situation is currently dominated by the escalating trade war between the United States and its top trading partners, Canada, Mexico, and China. The Trump administration has imposed sweeping tariffs on these countries, citing national security concerns and the need to curb the flow of drugs and undocumented immigrants. This has led to retaliatory tariffs from the affected countries, raising concerns about the future of global trade. The situation is expected to have significant economic consequences for all parties involved, with higher prices and disrupted supply chains being key concerns.
The US-Canada-Mexico-China Trade War
The US-Canada-Mexico-China trade war is a significant development that has the potential to disrupt global trade and impact businesses and consumers worldwide. The Trump administration's decision to impose sweeping tariffs on Canada, Mexico, and China has sparked strong reactions from the affected countries, who have announced retaliatory tariffs of their own. The tariffs are expected to raise prices for American consumers and disrupt supply chains, particularly in key industries such as agriculture, automotive, and energy. The US Chamber of Commerce has warned that the tariffs will upend supply chains and raise prices for American families.
The tariffs are also expected to have significant economic consequences for the targeted countries. Canada and Mexico have announced retaliatory tariffs of their own, while China has threatened to challenge the tariffs through the World Trade Organization. The Trump administration has threatened to expand the tariffs if the targeted countries retaliate, further escalating the situation.
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Further Reading:
Britain cannot depend on Norway for electricity – we need our own power - The Telegraph
Here’s what will get more expensive from Trump’s tariffs on Mexico, Canada and China - CNN
North American Trade War? The Geopolitical Impacts for China and the United States - Wilson Center
Trump announces significant new tariffs on Mexico, Canada and China - CNN
Trump hits Canada, Mexico and China with steep new tariffs, stoking fears of a trade war - CBS News
Trump hits Canada, Mexico and China with steep new tariffs; Canada retaliates - CBS News
Trump imposes new tariffs on imports from Mexico, Canada and China in new phase of trade war - NPR
Trump says pain from tariffs 'worth the price' as Canada and Mexico retaliate - BBC.com
Trump’s tariffs on Mexico, Canada and China set stage for trade war - Los Angeles Times
Themes around the World:
Renewables trade friction, re-routing
US Commerce set preliminary countervailing duties around 125.87% on India-origin solar cells, disrupting a fast-growing export channel. Firms may pivot to using imported cells for India assembly or redirect volumes, reshaping sourcing, margins and project timelines.
Risque budgétaire et fiscalité entreprises
La consolidation budgétaire reste contrainte par un Parlement fragmenté. Fitch maintient la note A+ mais pointe dette élevée; déficit attendu ~4,9% du PIB en 2026. Surtaxe exceptionnelle sur bénéfices prolongée, concentrée sur grands groupes, affectant plans d’investissement.
Maritime services restrictions risk
Policy debate is shifting from price-cap compliance to a full maritime services ban, targeting insurance, brokering and shipping support for Russian crude and products. If adopted, it would sharply reduce lawful service availability, complicate chartering and claims, and raise freight and legal costs globally.
Logística amazônica e conflito socioambiental
Protestos indígenas levaram à revogação de decreto de concessões/hidrovias e interromperam operações no porto da Cargill em Santarém. Isso expõe vulnerabilidades de corredores de grãos (soja/milho) no Norte, elevando risco operacional, reputacional e de cronograma para investimentos em infraestrutura.
Defence spending boom and localisation
Defence outlays are projected above €108 billion in 2026, benefiting German primes and suppliers and accelerating capacity expansion in munitions, vehicles, sensors and shipbuilding. However, EU joint-procurement rules and ‘buy-European’ politics may constrain non-EU vendors and partnerships.
Tech exports: recovery with churn
Tech remains a core export engine (about 57% of exports; 17% of GDP), with 2025 funding rising to roughly $15.6bn. Yet job seekers doubled to 16,300 and talent outflows persist, affecting hiring, delivery risk, and investment underwriting for R&D-heavy operations.
Tariff escalation and policy volatility
The administration is normalizing broad import surcharges (10% under Section 122, potentially 15%) while teeing up expanded Section 232/301 actions. This raises landed-cost uncertainty, complicates contract pricing, and accelerates friend‑shoring and relocation decisions across sectors.
Industrial policy and localization incentives
US industrial policy—clean energy and advanced manufacturing incentives—continues to steer investment toward domestic production and allied supply chains. Local-content rules and subsidy eligibility criteria can disadvantage offshore producers while encouraging US siting, JV structures, and retooling.
Anti-corruption enforcement and approvals
A renewed anti-corruption push aims to tighten control over sensitive areas and strengthen governance. While supportive of transparency long term, it can slow licensing, procurement, and land approvals in the near term. Investors should reinforce compliance, documentation, and stakeholder mapping.
Tariff regime reset, legal risk
After the Supreme Court invalidated IEEPA-based tariffs, the U.S. is using Section 122 (10% moving toward 15% “where appropriate”) as a 150‑day bridge to Section 301/232 actions, creating volatile landed costs and contract uncertainty for importers.
Cross‑strait security and blockade risk
Elevated China–Taiwan tensions and recurring PLA exercises keep contingency risk high for Taiwan Strait shipping, aviation routes, and insurance. Businesses should stress-test just‑in‑time models, diversify logistics corridors, and tighten crisis governance for Taiwan-dependent operations.
Labor shortage, mobilization, demographics
Workforce constraints intensify: roughly three million workers lost to emigration and at least 500,000 mobilized, shrinking the labor pool by about a quarter in government-controlled areas. Firms face wage pressure, skills gaps, relocation needs, and productivity risks.
USMCA 2026 review uncertainty
Canada faces heightened trade-policy volatility ahead of the July 2026 USMCA review, with scenarios including annual reviews and persistent U.S. sectoral tariffs. Uncertainty is already delaying investment decisions and complicating North American supply-chain planning for exporters and manufacturers.
Digital infrastructure and regulatory modernization
5G licensing was completed in 2025 with authorizations issued in early 2026; reforms also formalize digital HR notifications via registered e‑mail (KEP). Expect faster connectivity for industrial automation and logistics, alongside evolving cybersecurity, data, and employment-compliance requirements for multinationals.
Canada–China trade reset, targeted
Canada is partially reopening to China-made EVs via a quota (49,000/year) at 6.1% tariff, while China plans temporary tariff relief on Canadian goods including canola reductions. Opportunities rise in agri-food and EV supply chains, but policy reversals elevate geopolitical and reputational risk.
Security, crime, and operational resilience
Organised crime, cargo theft, and periodic unrest elevate costs for logistics, retail, and extractives, influencing site selection and insurance. Government focus on enforcement may help, yet firms should plan for disruption, strengthen supplier security, and build redundancy in distribution networks.
Security environment and border tensions
Militancy risks and periodic Pakistan–Afghanistan border escalations elevate duty-of-care, route security, and insurance costs, with potential for localized disruptions in transport corridors. Firms should plan for contingency logistics, staff mobility constraints, and heightened scrutiny for dual-use goods.
Energy Supply Shock Exposure
Middle East conflict risk is testing Taiwan’s import dependence and price stability. Taiwan holds >100 days oil and >11 days gas reserves, but LNG sourcing disruptions can raise power costs. Government pursues diversification and spot purchases, affecting industrial electricity pricing.
Pungutan ekspor CPO naik 12,5%
Mulai 1 Maret 2026, pungutan ekspor CPO dan beberapa turunan naik dari 10% menjadi 12,5% berdasarkan harga referensi. Industri memperkirakan tekanan harga CPO sekitar 3% dan TBS 7–8%. Kebijakan ini mengubah struktur biaya, strategi hedging, dan daya saing ekspor sawit.
Red Sea and Suez disruption
Renewed Houthi threats and carrier pullbacks raise transit times and war-risk surcharges, pushing some Asia–Europe flows around Africa. Israeli trade faces higher freight costs and volatility, with knock-on effects for inventory buffers, lead times, and contract pricing.
Tourism downturn from China tensions
Inbound arrivals fell 4.9% year-on-year in January as Chinese visitors plunged 61%, after Beijing travel warnings tied to Taiwan tensions. Retail, airports, and hospitality face revenue volatility, affecting investment cases and commercial real-estate demand in key destinations.
Customs system fragility and border delays
National outages of Mexico’s customs IT systems have caused kilometer-long truck queues at key crossings like Otay and Nuevo Laredo, forcing manual processing. This raises dwell times, demurrage and inventory buffers, and increases the value of redundancy in brokers, documentation and routing.
LNG trading shift and energy security
Japanese firms are reselling record LNG volumes: FY2024 resales rose ~15% y/y and represent ~40% of handled volumes, while domestic demand has fallen ~20% since FY2018. This supports trading profits but adds exposure to oversupply, price volatility, and contract flexibility.
Ports expansion and transshipment push
Saudi ports are gaining throughput, with transshipment up 22% year-on-year in January and new private participation at Jeddah’s South Container Terminal. Greater automation and capacity improve reliability for regional distribution, supporting manufacturers, e-commerce, and time-sensitive imports.
FX instability and import constraints
Sanctions and limited banking access strain hard-currency availability, driving rial volatility and complicating letters of credit, repatriation, and supplier payments. Importers face higher working-capital needs, sporadic shortages of inputs and spare parts, and increased reliance on intermediaries and barter-like structures.
IMF programme and fiscal tightening
Ongoing IMF EFF/RSF reviews drive tax hikes, spending cuts, and governance reforms amid FBR revenue shortfalls (≈Rs429bn in 8MFY26). This shapes budget priorities, contract certainty, and public-sector payment risks, affecting investor confidence and deal timelines.
US tariff framework uncertainty
Thailand faces shifting US tariff architecture: reciprocal frameworks may be upgraded, while baseline 10–15% global tariffs and product-specific duties persist. Firms should model duty scenarios, rules-of-origin compliance, and possible Section 301/232 actions affecting autos, metals, and sensitive sectors.
Cyber retaliation against infrastructure
Iranian-aligned cyber actors are expected to intensify disruptive and destructive operations against U.S. and allied critical infrastructure, ports, airlines, finance, and industrial systems. Heightened alert conditions increase downtime and regulatory exposure, with spillovers via suppliers and managed-service providers.
Tax reform and housing incentives
Budget deliberations flag reforms to negative gearing and the 50% capital-gains-tax discount (potentially cut to ~33% for housing). Shifts could reprice residential assets, affect build-to-rent returns, and alter capital allocation for inbound investors and developers.
Trade diversification push beyond U.S.
With U.S. tariff volatility, the Carney government is explicitly targeting major expansion of non-U.S. exports over the next decade. Expect more outbound diplomacy and infrastructure debate to access Asian and European markets—creating opportunities in logistics, port capacity, and export finance.
Supply-chain reorientation to “friendly” hubs
Trade increasingly routes through China, Turkey, UAE and Central Asia via parallel imports and intermediary logistics. This diversifies access to inputs but increases compliance complexity, lead times, and exposure to sudden controls, seizures, or partner-bank de-risking.
Sectoral duties hit metals autos
Section 232-style tariffs on steel, aluminum and autos remain the most damaging to Canada, driving production shifts and shutdown risks. Multinationals should reassess sourcing, rules-of-origin, and capacity allocation across North America to protect margins and contract reliability.
FX liquidity and pound stability
Foreign reserves reached a record $52.6bn (about 6.9 months of imports) and banks forecast USD/EGP around 45–49 in 2026. Improved liquidity supports trade finance, but devaluation risk remains tied to reform execution and external shocks.
Tightening migration and visa rules
Visa restrictions and proposed longer settlement qualifying periods are cutting foreign student and worker inflows; net migration could fall sharply, even negative. Labour-intensive sectors (care, construction, hospitality) face hiring frictions, wage pressure and project delays; universities’ finances are strained.
Sanctions expansion and compliance burden
Ukraine is tightening sanctions against Russia-linked defense, finance, crypto, and “shadow fleet” actors, including 225 captains and dozens of entities. Multinationals face heightened due-diligence, counterparty screening, and shipping-chain transparency requirements to avoid secondary exposure and reputational risk.
Attractivité et incertitude politique 2027
Climat d’investissement fragilisé par instabilité politique et débats fiscaux. Baromètre AmCham/Bain: moins d’un tiers des investisseurs américains jugent la perception du pays positive; 41% anticipent une dégradation sectorielle. Les perspectives 2027 accroissent le risque de volatilité réglementaire.