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:
Middle East Shock Hits Economy
Thailand cut its 2026 growth forecast to 1.6%, while the central bank sees 1.5% growth and 2.9% inflation as conflict-driven oil prices raise business costs. Import dependence on energy increases exposure for transport, manufacturing, consumer demand and currency stability.
Faster project approvals push
Canberra is backing bilateral state-federal environmental approvals, with A$45 million to reduce duplicated assessments and accelerate major resource, energy, and housing projects. Faster permitting could shorten investment timelines, though implementation quality and regulatory consistency will determine business confidence and execution benefits.
North Sea Policy Uncertainty
Debate over Rosebank, Jackdaw, new licences, and windfall taxes is keeping UK energy policy unsettled. For investors and industrial users, the tension between decarbonisation goals and domestic hydrocarbon supply complicates capital allocation, long-term procurement, and confidence in energy-intensive sectors.
Energy Supply Bottlenecks
Vietnam’s power capacity remains below plan at nearly 90,000 MW versus a target above 94,000 MW, while key pricing and offshore wind rules are unresolved. For manufacturers and data centers, this raises risks of electricity shortages, operating disruptions, and higher energy-security spending.
Domestic Economic Instability Deepens
Iran’s economy is under severe pressure from inflation, currency weakness, damaged infrastructure, and fiscal strain. Reports cite food inflation above 100% earlier this year, rial depreciation, and payroll stress, weakening consumer demand, payment reliability, project viability, and business continuity.
Mining Export Competitiveness Pressure
Mining remains central to exports and fiscal receipts, but logistics failures and regulatory uncertainty are constraining expansion. Mineral ores account for about 52% of merchandise exports, while producers face lost volumes, higher haulage costs and dependence on reforms to unlock critical minerals investment.
USMCA Rules Tightening Risk
Tariff circumvention concerns are sharpening scrutiny of North American supply chains ahead of the USMCA review. Altana estimates about $300 billion in goods avoid tariffs annually, while suspicious transactions rose 76%, raising compliance costs and threatening Mexico-centered manufacturing strategies.
Privatization Drive Attracts Capital
Egypt is accelerating state asset sales and listings to raise foreign capital, deepen markets, and expand private-sector participation. Government reporting says $6 billion has been raised from 19 exit deals, while fresh IPOs and petroleum listings could create new entry points for investors.
Tariff Volatility Reshapes Trade
Repeated tariff changes, litigation, and possible new Section 301 actions are keeping import costs unstable, delaying sourcing decisions and contract planning. Businesses face higher landed costs, frequent policy reversals, and accelerating diversification toward Mexico, Southeast Asia, bonded warehousing, and foreign-trade zones.
Digital Entry and Talent Attraction
Turkey is simplifying market entry through online company formation, a one-stop investment office, Tech Visa channels, and incentives tied to Terminal Istanbul. Faster setup, two-week work permits, and support for digital firms may benefit regional service, technology, and startup investment strategies.
Energy Shock Operating Pressure
Higher oil prices linked to Middle East tensions are lifting US fuel, freight, and input costs while reinforcing inflation. International businesses face margin pressure, more volatile transport expenses, and greater risk that geopolitical energy disruptions spill into broader American supply-chain operations.
Alliance Frictions Reshape Strategy
US-South Korea tensions over tariffs, burden-sharing, and Middle East cooperation are pushing the relationship toward a more transactional footing. Companies should expect policy unpredictability around market access, troop-cost politics, industrial commitments, and cross-border investment negotiations affecting long-term planning.
Export Resilience Under Cost Pressure
March exports rose 11.7% year on year, led by China demand and semiconductor-related shipments, but margins are tightening as firms absorb tariff and input-cost pressures. Strong headline trade masks emerging strain from higher commodity prices, weaker terms of trade, and supply disruptions.
Energy electrification policy acceleration
Paris unveiled a 22-measure electrification plan with nearly €4.5 billion annually in new funding through 2030, targeting fossil fuels below 30% by 2035. This supports industrial decarbonization, transport electrification, and lower long-run energy exposure for manufacturers and investors.
Budget Consolidation Shapes Demand
The 2026/27 budget prioritizes debt reduction, fiscal stability, and targeted support for production, exports, and households. Authorities aim to cut foreign debt by $1–2 billion, reduce debt-to-GDP to 78%, and lift revenues 30%, affecting taxes, procurement, and public spending patterns.
Fuel And Industrial Shortages
Energy disruption is constraining domestic industry, with reported gasoline deficits reaching 77 million liters daily under war conditions and refinery stress worsening shortages. Businesses face heightened risk of electricity curbs, fuel scarcity, factory stoppages, transport disruption, and delayed local procurement.
Political Continuity Enables Policy Execution
A coalition government with a sizable parliamentary majority has reduced near-term political volatility, improving prospects for reform and investment approvals. For international businesses, steadier policymaking lowers operational uncertainty, though fiscal pressures and structural competitiveness issues still complicate execution.
Choc énergétique et inflation
La flambée des carburants, avec une hausse de 14,2% selon l’Insee, renchérit transport, production et logistique. L’augmentation des coûts énergétiques pèse sur les marges, entretient l’inflation à 2,2% et fragilise les secteurs intensifs en carburants.
High cost base hurts competitiveness
Israel’s cost of living and operating environment continue to outpace many peer economies, with food and housing particularly expensive. Import barriers, high VAT, market concentration and regulatory burdens increase consumer prices and business costs, weighing on profitability and location decisions.
Defence Industrial Expansion Drive
Canada’s push to build domestic defence capacity is attracting new manufacturing investment as Ottawa plans major procurement expansion over the next decade. Proposed projects in Ontario signal opportunities for foreign investors, but success depends on procurement speed, localization rules, and industrial policy clarity.
Oil Export Volatility Intensifies
Russia’s crude and product revenues jumped to $19 billion in March from $9.7 billion in February, yet Ukrainian strikes and shifting waivers cut transshipments and forced output reductions of 300,000-400,000 barrels per day, increasing energy-market and shipping volatility.
Offshore Energy Infrastructure Vulnerability
Iranian missile and drone threats exposed Israel’s gas-sector fragility: Tamar alone sustained domestic supply while Leviathan and Karish were shut. Four weeks of shutdowns reportedly cost about NIS 1.5 billion, lifted electricity costs 22%, and disrupted exports to Egypt and Jordan.
Power Shortages Disrupt Industry
Pakistan’s electricity shortfall widened to 3,400 MW as hydropower output fell 48% year on year and LNG disruptions persisted. Outages of six to seven hours in some areas threaten factory utilization, telecom continuity, cold chains and delivery reliability.
Energy System Remains Vulnerable
Ukraine’s energy sector and critical infrastructure remain exposed ahead of the next winter, with new funding partly earmarked for resilience. Continued vulnerability raises risks for manufacturing uptime, cold-chain integrity, data centers, and energy-intensive investors assessing operating continuity and backup requirements.
Russian Exposure and Sanctions Risk
Russia supplied roughly half of India’s crude imports in March, while U.S. waivers and insurer approvals temporarily eased flows. This dependence creates significant sanctions, payment, insurance and reputational risks for foreign firms, especially where supply chains, refining links or U.S. market exposure overlap.
Suez Canal Revenue Weakness
Red Sea insecurity continues to suppress canal earnings despite partial recovery. Quarterly Suez revenues reached $1.15 billion, still far below the $2.4 billion recorded before shipping disruptions, affecting foreign-exchange inflows, maritime routing economics, and Egypt’s trade-linked fiscal position.
Stricter Rules of Origin
U.S. negotiators are pushing to raise North American sourcing requirements, reportedly toward 100% for key components such as engines, electronics and software, versus roughly 75% today. That would force supplier reconfiguration, deeper localization and higher compliance costs across manufacturing chains.
Shekel Appreciation Squeezes Exporters
The shekel strengthened below 3 per dollar for the first time in 31 years, with the dollar down 18.83% year-on-year. While reflecting lower risk premium and capital inflows, the move compresses margins for exporters and tech firms with dollar revenues and shekel-denominated costs.
Energy Import Vulnerability Deepens
South Korea secured 273 million barrels of crude and 2.1 million tons of naphtha via non-Hormuz routes, enough for over three months and one month respectively, underscoring acute exposure to Middle East disruption, petrochemical costs, freight risk, and industrial continuity.
Investment Momentum Broadens Geographically
Total FDI reached $88.29 billion in April-February 2025-26, with net FDI rising to $6.26 billion and officials expecting about $90 billion for the full year. Grounded projects across 14 states signal expanding industrial opportunities, especially in chemicals, pharma, electronics, and auto-EV.
Electrification drives infrastructure buildout
A new electrification plan channels about €4.5 billion annually through 2030, targeting transport, industry, buildings, and digital uses. France also plans to expand charging points from 4,500 to 22,000 for cars and add 8,000 truck chargers by 2035.
Structural Slowdown and Deflation
Weak consumer confidence, prolonged property weakness, industrial overcapacity, and disinflation are pressuring demand. With business groups warning of rising deflation risk, firms face softer sales, pricing pressure, and slower cash conversion, particularly in consumer, real estate-linked, and industrial sectors.
Trade Digitization Improves Clearance
Pakistan Single Window has surpassed 100,000 users, processing 1.58 million declarations and 1.02 million permits, while port-community integration is accelerating vessel clearance. Despite broader macro risks, customs digitization is a meaningful positive for compliance efficiency, shipping visibility and cross-border trade execution.
Sanctions Expand Secondary Exposure
Washington is widening Iran-related secondary sanctions to banks, shippers, refiners, and intermediaries, including entities in China, Hong Kong, the UAE, and Oman. Companies now face higher compliance, shipping, insurance, and payment risks if counterparties touch sanctioned energy or logistics networks.
Black Sea Corridor Resilient
Despite persistent attacks, the maritime corridor remains central to trade. Since September 2023 it has moved more than 190 million tonnes, including 110 million tonnes of grain, while Q1 container throughput rose 43% year on year, supporting export continuity.
Steel and Metals Trade Shock
Mexico’s steel industry has dropped to 55% capacity utilization, with exports down 53% in 2025 and finished steel output down 8.1%. US duties of 50% on basic metals and 25% on derivatives threaten manufacturing inputs and industrial supply chains.