Digital IP Enforcement Tightens

After being designated a U.S. Priority Foreign Country on IP, Vietnam intensified enforcement and detected about 2,036 cases in May. Stronger penalties, AI-based monitoring and a national IP database will improve compliance expectations, especially for e-commerce, software and branded goods businesses.

Foreign Labor Rules Tighten

Tokyo is reforming migrant labor programs and considering stricter permanent-residency criteria even as business dependence on foreign workers rises. This creates uncertainty for hospitality, logistics, and industrial employers that rely on overseas labor for staffing continuity and cost control.

China and Gulf Investment Push

Pakistan is actively courting Chinese and Gulf capital in ports, energy, infrastructure, agriculture, and IT. CPEC Phase 2.0 and Saudi investment talks may create selective opportunities, but execution risk remains high due to governance gaps, security issues, and regulatory inconsistency.

Digital Regulation and Investment Friction

Canada’s digital and media regulation is becoming a trade irritant. CRTC rules requiring major streamers to contribute 15% of Canadian revenues drew U.S. criticism, while Ottawa is advancing AI spending and digital sovereignty measures that could affect foreign tech operators, compliance costs and investment perceptions.

Russia Sanctions and Secondary Tariff Risk

Congress and the administration are developing tougher Russia measures, including possible 500% tariffs tied to Russian imports or countries purchasing Russian commodities. Even if not fully enacted, the proposal heightens sanctions risk for energy traders, shippers, insurers, and globally exposed compliance teams.

Suez Canal Volatility Persists

Red Sea and wider Middle East conflict continue to reshape Suez economics. April canal revenue rose 27% year on year to $419 million, but Egypt still says it has lost nearly $10 billion from earlier disruptions, sustaining route, insurance, and timing uncertainty.

PIF Domestic Investment Reorientation

The Public Investment Fund is shifting roughly 80% of its portfolio toward domestic projects while reducing international exposure from 30% to 20%. This strengthens local deal flow, infrastructure demand, and industrial opportunities, but may narrow outbound capital channels for foreign partners.

Rare Earth Supply Leverage

China’s export licensing on key heavy rare earths remains a major global chokepoint. Exports of yttrium, dysprosium and terbium are reportedly about 50% below pre-restriction levels, threatening automotive, electronics and defense-linked supply chains while reinforcing pressure to localise production or diversify procurement outside China.

Energy Export and Grid Expansion

Ottawa is prioritizing energy expansion, transmission links and permitting reform, while electricity demand is expected to double by 2050. New LNG, pipeline and intertie projects could improve export diversification and industrial competitiveness, but execution, consultation and regulatory timelines remain decisive business variables.

Tariff Regime Volatility Intensifies

Washington is rebuilding a broad tariff wall after court setbacks, proposing 10%-12.5% Section 301 duties across roughly 60 partners while modifying Section 232 metals coverage. The result is greater pricing uncertainty, higher compliance costs, and renewed sourcing pressure for global manufacturers and importers.

AI-Led Export Surge

Taiwan’s export performance is being powered by AI-related electronics demand, with May exports rising 51.7% year on year to US$78.48 billion. Strong growth supports investment momentum, but also heightens dependence on cyclical tech demand and external policy conditions.

India FTA implementation uncertainty

Implementation of the UK-India free trade agreement may slip to autumn 2026 as steel safeguard disputes persist, creating uncertainty for tariff planning, sourcing strategies, and market-entry timing for firms expecting improved access across goods, services, and investment flows.

Political Reform Agenda Uncertainty

The ruling party’s broad local-election win was offset by losing Seoul, signaling limits to President Lee’s domestic mandate. This could slow contentious reforms, especially in taxation and regulation, leaving businesses facing less policy clarity on property, governance, and broader legislative priorities.

Record FDI, Reform Pressure

India recorded gross FDI inflows of about $94.5 billion in FY2025-26, yet policymakers are reviewing bilateral investment treaty rules as investors continue to cite arbitration constraints, tax frictions, and dispute-resolution delays that affect capital allocation, project structuring, and risk pricing.

Industrial Policy Tightens Localization

Federal incentives for domestic manufacturing remain attractive, but oversight is tightening around foreign—especially Chinese—involvement in tax-credit-backed projects. Investors in batteries, clean energy, electronics, and strategic manufacturing should prepare for tougher compliance reviews, partner restrictions, and national-security screening.

ASEAN Partnerships Bolster Resilience

Vietnam is deepening economic links with Singapore, Thailand and the Philippines around supply chains, food security, advanced manufacturing and logistics. These agreements diversify commercial options, support regional sourcing, and reduce single-market dependence for trade, investment, and operating continuity.

Customs Enforcement Burden Expands

A new executive order directs tighter customs enforcement against transshipment, undervaluation, forced-labor exposure, and importer-of-record abuse. Companies should expect higher bond requirements, expanded beneficial-ownership disclosures, more supply-chain documentation, and greater audit and penalty risks at the U.S. border.

Tariff Regime Volatility Intensifies

Washington is expanding tariff use through Section 301 and revised Section 232 actions, including proposed 10% to 12.5% duties on 60 economies and altered metal tariffs. Import costs, sourcing models, customs exposure, and pricing strategies are becoming materially less predictable.

Critical Inputs Supply Dependence

German industry remains highly vulnerable to concentrated dependence on Chinese chips, rare earths and other critical inputs. EU discussions on mandatory supplier diversification reflect mounting concern that even short-lived disruptions could halt production lines across automotive, machinery and advanced manufacturing sectors.

Social stability and migration tensions

Rising anti-immigrant tensions are becoming a tangible operational and reputational risk. Business groups warn violence against foreign nationals can disrupt personnel movement, trade corridors, and regional commercial ties, while also increasing retaliation risks for South African companies operating elsewhere in Africa.

Energy System Decentralizes Rapidly

Repeated strikes on thermal and gas infrastructure are accelerating investment in distributed wind, solar, gas generation and storage. Projects are being built even during wartime, but insurance constraints, financing gaps and equipment sourcing risks still limit scale and investor participation.

Capital Controls Trap Foreign Funds

Russia’s central bank extended restrictions on transferring funds abroad for non-residents from unfriendly countries until December 2026. For foreign investors and companies, this heightens dividend repatriation risk, trapped liquidity, exit barriers and broader uncertainty over cross-border treasury and capital management.

Aviation and connectivity expansion

Riyadh Air will begin flights in July, targeting more than 100 destinations by 2030 with up to 72 Dreamliners. Despite airspace disruption, Saudi Arabia is pushing ahead as an aviation hub, improving business access, tourism inflows, and cargo connectivity.

India FTA Reshapes Trade

The UK-India trade pact enters force on 15 July, cutting tariffs across most trade lines and expanding services mobility. It should lift bilateral trade and investment, but firms in steel and compliance-heavy sectors must adapt quickly to new quotas and registration rules.

Energy Shock and Cost Exposure

The Middle East conflict is feeding higher energy prices, inflation and weaker growth in France, with the Commission forecasting 0.8% growth in 2026. Businesses face renewed pressure on transport, input costs, margins and contingency planning across energy-intensive supply chains.

AUKUS-Driven Industrial Realignment

AUKUS continues reshaping Australia’s industrial and infrastructure landscape, with major spending on submarine, defence, and maritime facilities. While it creates long-term opportunities in advanced manufacturing, logistics, and technology, execution risk, US dependency, and policy debate complicate investor timelines and sovereign capability planning.

Supply Chain Diversification Advantage

Amid Red Sea and Hormuz disruptions, Turkey’s diversified sourcing and multimodal networks are enhancing its role as an alternative manufacturing and transit base. Businesses serving Europe, the Gulf, and Central Asia may gain from shorter lead times and route diversification.

Nearshoring Potential Meets Delays

Mexico retains strong nearshoring appeal given deep US integration and record first-quarter 2026 FDI, including $10.21 billion from the United States, up 23.6% year on year. Yet tariff uncertainty and delayed treaty clarity are causing companies to postpone industrial expansion and supplier localization decisions.

Tourism and services recovery pressure

Tourism remains well below pre-war levels, with revenue falling from nearly $6 billion in 2023 to about $2.2 billion in 2024. Security concerns and a stronger shekel both weigh on inbound demand, affecting hospitality, aviation, retail, and service-sector recovery prospects.

Selective US Trade Preferences

Taiwan secured rare U.S. Section 232 tariff relief for non-semiconductor goods, including auto parts capped at 15% from roughly 26.71% and exemptions for certain aircraft-related metal derivatives. This improves competitiveness for selected manufacturers while underscoring policy uncertainty across sectors.

Congress-government tensions delay decisions

Frictions between President Lula’s administration and Senate leadership are complicating approval of economic priorities and raising judicialization risks. For businesses, this means slower policymaking, greater regulatory reversals, and uncertainty around labor, tax, and sector-specific legislation affecting investment timing and compliance planning.

AI data centers reshape industry

SoftBank’s €45 billion commitment by 2031 and other hyperscaler projects are positioning France as a major European AI-computing hub. This expands digital infrastructure and supplier demand, while increasing competition for power, land, and high-value technology capture.

Logistics and Infrastructure Upgrading

Freight corridors, logistics networks and customs facilitation remain critical enablers of India’s trade competitiveness. Continued public investment supports supply-chain efficiency and industrial clustering, yet bottlenecks in multimodal connectivity, ports and last-mile execution still shape operating costs and timelines.

Third-Country Trade Networks Targeted

New sanctions proposals increasingly focus on companies in China, India, Turkey, Central Asia and other jurisdictions accused of helping Russia obtain restricted goods. This complicates distributor screening, procurement routing and intermediary relationships for multinationals using regional hubs to serve Eurasian markets.

Gas export reliability concerns

Repeated interruptions to Israeli gas exports since October 2023 have raised doubts about supply reliability for Egypt and Jordan. Energy buyers are arranging alternatives, while foreign partners such as SOCAR and Chevron expand roles, creating both resilience opportunities and heightened geopolitical sensitivity around regional energy trade.

Tax Incentives and Investment Pitch

Ankara is intensifying its foreign investment push through major tax measures, including cutting corporate tax for manufacturing and agriculture to 12.5%. Additional 20-year exemptions tied to the Istanbul Financial Center and foreign-sourced income could improve Turkey’s attractiveness for regional headquarters and export platforms.