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Mission Grey Daily Brief - February 04, 2025

Summary of the Global Situation for Businesses and Investors

The global trade war is escalating as President Donald Trump imposes tariffs on Canada, Mexico, China, and Europe. Global markets are bracing for chaos as retaliatory actions are announced by affected countries. Economists warn of spiralling prices and disrupted supply chains, while world leaders express concerns about the potential impact on global trade and economic growth. Businesses and investors should monitor the situation closely and adjust their strategies accordingly.

Global Trade War Escalates

The global trade war is escalating as President Donald Trump imposes tariffs on Canada, Mexico, China, and Europe. Global markets are bracing for chaos as retaliatory actions are announced by affected countries. Economists warn of spiralling prices and disrupted supply chains, while world leaders express concerns about the potential impact on global trade and economic growth. Businesses and investors should monitor the situation closely and adjust their strategies accordingly.

Tariffs and Retaliation

President Donald Trump has imposed tariffs on Canada, Mexico, and China, citing concerns about <co


Further Reading:

A Rekindled Conflict Has Pushed Colombia Into a State of Emergency - New Lines Magazine

Britain cannot depend on Norway for electricity – we need our own power - The Telegraph

China calls Trump tariffs a 'serious violation' and vows to respond in kind - The Independent

China hits back as Trump’s tariffs go into effect - CNN

China shrugs off new Trump tariffs but bruising trade war looms - Hong Kong Free Press

Daybreak Africa: Uganda begins Ebola vaccine trial after new outbreak kills a nurse - VOA Africa

Donald Trump’s tariff wallop demonstrates the brute power of an imperial presidency - The Conversation

Global markets brace for chaos ahead of Trump's tariffs on Canada and China - NBC News

Trump announces significant new tariffs on Mexico, Canada and China, sparking retaliatory actions - CNN

Trump hits Canada, Mexico and China with steep new tariffs, says Americans could "some pain" - CBS News

Trump hits Canada, Mexico and China with steep new tariffs, says Americans could feel "some pain" - CBS News

U.S. stocks, global markets fall on fears of a new trade war - NPR

US tariffs on imports set to rise drastically on Tuesday - Vatican News - English

Uh oh, Canada: Trump declares trade war on America's "best friend" - Axios

World reacts to Trump's order for tariffs on Canada, Mexico and China, as he warns Europe will be next - CBS News

Themes around the World:

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EU Customs Union Modernization Stalemate

Turkey’s business community is pressing for the modernization of the EU-Turkey Customs Union, which is critical for trade and value chains. Delays and lack of progress risk Turkey’s competitiveness, especially as new EU FTAs and green regulations reshape market access and supply chains.

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Escalating tariffs and legal risk

Wide-ranging import tariffs—especially on China—are lifting input costs and retail prices, while Supreme Court review of IEEPA authorities adds reversal risk. Companies should stress-test pricing, customs bonds, and contract clauses for sudden duty changes.

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Maritime regulation and Jones Act rigidity

Court affirmation and continued political support for the Jones Act sustain high domestic coastal shipping costs and limited capacity for inter-U.S. moves. Energy, agriculture, and construction inputs may face higher delivered costs, affecting project economics and intra-U.S. supply-chain design.

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Banking hidden risks and real-estate spillovers

Banks’ loan guarantees rose 19% to VND 52 trillion in the first nine months, outpacing equity growth and increasing off-balance-sheet exposure (e.g., SBLCs). Thin capital buffers heighten systemic risk; credit tightening could hit construction, suppliers and consumer demand.

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Ports and freight connectivity upgrades

Karachi logistics is improving via DP World–Pakistan Railways Pipri freight corridor and new automated bulk-handling equipment, aiming to shift containers from road to rail and reduce turnaround times. Execution risk persists, but successful delivery lowers inland logistics costs and delays.

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Dollar, Rates, and Financing Conditions

Shifts in U.S. monetary expectations and risk-off episodes tied to trade actions can strengthen the dollar and tighten financing. This affects import costs, commodity pricing, emerging-market demand, and the viability of capex-heavy supply-chain relocations, especially for leveraged manufacturers and traders.

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Foreign real estate ownership liberalization

New rules enabling foreign ownership of land (with limits in Makkah/Madinah) are lifting international demand for Saudi property and mixed-use developments. This improves investment entry options and collateralization, but requires careful title, zoning, and regulatory due diligence.

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US–Taiwan tariff pact reset

The newly signed US–Taiwan reciprocal trade deal lowers US tariffs on Taiwan to 15% and has Taiwan remove or reduce 99% of tariff barriers on US goods. It reshapes sourcing, pricing, compliance, and market-entry strategies across electronics, machinery, autos, and agriculture.

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استقرار النقد والتضخم والسياسة النقدية

الاحتياطيات سجلت نحو 52.59 مليار دولار بنهاية يناير 2026، مع تباطؤ التضخم إلى قرابة 10–12% واتجاه البنك المركزي لخفض الفائدة 100 نقطة أساس. تحسن الاستقرار يدعم الاستيراد والتمويل، لكن التضخم الشهري المتذبذب يبقي مخاطر التسعير والأجور مرتفعة.

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China-De-Risking und Rohstoffabhängigkeiten

Die EU bleibt durch chinesische Exportkontrollen bei Seltenen Erden verwundbar (ca. 60% Förderung, 90% Verarbeitung). Deutschlands Unternehmen müssen Beschaffung diversifizieren, Lager aufbauen und Substitution beschleunigen. Gleichzeitig wächst politischer Druck, Handelsrisiken mit Investitionszugang und Marktchancen auszubalancieren.

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Tourism recovery with demand mix risks

Tourism is near recovery: Phuket passengers rebounded to 96.4% of 2019 and arrivals Jan 1–25 reached 2.63m (≈THB129.9bn). However, China remains volatile and room-rate power is limited, affecting retail, hospitality capex, labor demand, and services supply chains.

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Nearshoring meets security costs

Nearshoring continues to favor northern industrial corridors, but cartel violence, kidnappings and extortion elevate operating costs and duty-of-care requirements. Firms face higher spending on private security, cargo theft mitigation and workforce safety, shaping site selection, insurance and logistics routing decisions.

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EV and battery chain geopoliticization

China’s dominance in batteries and EV components is triggering stricter foreign procurement rules and tariffs. New “foreign entity of concern” screening and higher Section 301 tariffs are reshaping project economics, pushing earlier diligence on origin/ownership and boosting demand for non‑China cell, BESS and recycling capacity.

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Climate shocks and heat stress

Flood reconstruction and increasingly severe heat waves reduce labour productivity, strain power systems and threaten agriculture-linked exports. Businesses face higher continuity costs, insurance constraints and site-selection trade-offs, with growing expectations for climate adaptation planning and resilient supply chains.

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AI chip export controls to China

Policy oscillation on allowing sales of high-performance AI chips to China creates strategic risk for chipmakers and AI users. Companies must manage compliance, customer screening, and geopolitical backlash, while potential future tightening could disrupt revenue, cloud infrastructure, and global AI deployment plans.

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Sanctions enforcement and secondary risk

Expanded sanctions and tougher enforcement related to Russia, Iran, and technology diversion raise compliance burdens and counterparty risk. Companies face greater exposure to secondary sanctions, stricter due diligence on intermediaries, and potential payment/insurance disruptions, especially in energy, shipping, and dual-use goods.

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Sanctions expansion and secondary exposure

US is intensifying sanctions, particularly on Iran’s oil and petrochemical networks, targeting 15 entities and 14 vessels. Heightened enforcement and secondary-sanctions risk raise due-diligence burdens for shipping, insurers, banks, traders, and commodity buyers with complex counterparties.

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AI and Technology Export Boom

Taiwan’s economy grew 8.6% in 2025, driven by surging AI-related exports and technology shipments, especially to the US. This boom supports robust corporate profits and investment, but exposes the economy to volatility from tech cycles and trade policy shifts.

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Shipbuilding and LNG carrier upcycle

Korean yards are securing high-value LNG carrier orders, supported by IMO emissions rules and rising LNG project activity, with multi-year backlogs and improving profitability. This benefits industrial suppliers and financiers, while tightening shipyard capacity and delivery slots through 2028–2029.

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Dollar weakness and policy risk premium

The U.S. dollar’s slide to multi-year lows, amid tariff uncertainty and governance concerns, increases FX volatility for importers and investors. A weaker dollar can support U.S. exporters but raises U.S.-bound procurement costs and complicates hedging strategies.

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Sanctions, export controls, compliance burden

Canada’s expanding sanctions and export-control alignment with allies increases screening requirements for dual-use items, shipping, finance and tech transfers. Multinationals need stronger KYC/UBO checks, third-country routing controls, and contract clauses to manage enforcement and sudden designations.

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Critical Infrastructure and Energy Upgrades

Taiwan is investing in power grid upgrades, renewable energy, and digital infrastructure to support its expanding high-tech and data center sectors. These initiatives are vital for business continuity, supply chain reliability, and long-term competitiveness.

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AI Basic Act compliance

South Korea’s AI Basic Act introduces duties for high‑impact AI, human oversight, and labeling of AI-generated content, applying to large domestic and foreign platforms. Cross-border digital services face new governance, localization, and documentation requirements affecting product roadmaps and go‑to‑market.

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Trade facilitation and digital licensing

Authorities aim to cut investment licensing from ~24 months to under 90 days via a unified digital platform, while reducing customs clearance from 16 days to five (target two) and moving ports to 7-day operations. Execution quality will determine actual savings.

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Energy security and transition buildout

Vietnam is revising national energy planning and PDP8 assumptions to support 10%+ growth, targeting 120–130m toe final energy demand by 2030 and renewables at 25–30% of primary energy. Grid, LNG, and clean-energy hubs shape site selection and costs.

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‘Made in Europe’ Strategy Debated

France champions the EU’s ‘Made in Europe’ industrial strategy to counter Chinese imports and strengthen supply chains. Internal EU divisions over protectionism versus openness create uncertainty for multinational firms, affecting procurement, investment, and market access decisions.

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Energy security and gas reservation

Federal plans to introduce an east-coast gas reservation from 2027—requiring LNG exporters to reserve 15–25% for domestic supply—could alter contract structures, price dynamics and feedstock certainty for manufacturers and data centres. Producers warn of arbitrage and margin impacts in winter peaks.

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Sanctions and secondary-risk pressure

U.S. sanctions enforcement remains a major commercial variable, including tariff penalties linked to third-country Russia oil trade. The U.S. removed a 25% additional duty on Indian goods after policy assurances, signaling that supply chains touching sanctioned actors face sudden tariff, banking, and insurance shocks.

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Geopolitical realignment of corridors

With European routes constrained, Russia deepens reliance on non-Western corridors and intermediaries—through the Caucasus, Central Asia, and maritime transshipment—to sustain trade. This raises reputational and compliance risk for firms operating in transit states, where due diligence on beneficial ownership and end-use is increasingly critical.

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BoJ tightening, yen volatility

The Bank of Japan’s post-deflation normalisation (policy rate at 0.75% after December hike) keeps FX and JGB yields volatile, raising hedging costs and repricing M&A and project finance. Authorities also signal readiness to curb disorderly yen moves.

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Riesgo arancelario y T‑MEC

La política comercial de EE. UU. y la revisión del T‑MEC elevan incertidumbre para exportadores. Aranceles a autos mexicanos (25% desde 2025) ya redujeron exportaciones (~‑3% en 2025) y empleo, afectando decisiones de inversión y contratos de suministro.

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Choques comerciais no agronegócio

Novas medidas de China e México sobre carne bovina alteram fluxo: a China impõe cota de 1,1 milhão t a 12% e excedente com sobretaxa de 55% (até 67% efetivo); México taxa acima de 70 mil t. Exige diversificação de destinos e ajustes na cadeia.

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Customs duty rebalancing on inputs

India is cutting tariffs on critical inputs (EV batteries, solar glass chemicals, rare-earth feedstocks like monazite) to reduce China dependence and protect exporters’ margins. Multinationals should reassess landed-cost models, rules-of-origin, and supplier localization roadmaps.

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Energy Geopolitics and Trade Deals

U.S. trade negotiations increasingly bundle energy commitments and geopolitical conditions, as seen in tariff relief tied to partners’ changes in Russian oil purchases. This links market access to energy sourcing, complicating procurement strategies and increasing political risk in long-term offtake contracts.

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Sanctions enforcement intensifies at sea

UK and allies are escalating action against Russia’s ‘shadow fleet’, including interdictions, proposed boarding powers and broader maritime-services bans. Shipping, insurers, traders and banks face higher compliance burdens, detention risk, route disruption and potentially higher freight and war-risk premiums.

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Afghan border closures disrupt trade

Intermittent closures and tensions with Afghanistan are hitting border commerce, with KP reporting a 53% revenue drop tied to disrupted routes. Cross-border traders face delays, spoilage, and contract risk; Afghan moves to curb imports from Pakistan further threaten regional distribution channels.