Return to Homepage
Image

Mission Grey Daily Brief - February 17, 2025

Summary of the Global Situation for Businesses and Investors

The global situation is characterised by rising tensions between the United States and Europe, Russia, and Ukraine, as well as ongoing conflict in the Middle East. US President Donald Trump has held talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine, but Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory. Meanwhile, Israel and Hamas have agreed to a fragile ceasefire deal, but the war could resume if no agreement is reached on the more complicated second phase. The Munich Security Conference has highlighted the growing divide between the US and Europe, with Zelenskyy calling for the creation of an 'armed forces of Europe' and US Vice President JD Vance criticising European leaders for their handling of various issues. French President Emmanuel Macron has called an emergency summit of European leaders to discuss the challenges posed by the Trump administration.

US-Europe Tensions

The US-Europe relationship is under strain, with President Trump holding talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine. Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory, saying that Europe must take the threat of further war seriously. He has called for the creation of an 'armed forces of Europe', arguing that Europe needs to defend itself and make its own decisions. French President Emmanuel Macron has called an emergency summit of European leaders to discuss the challenges posed by the Trump administration, with Polish Foreign Minister Radosław Sikorski expressing concern over Trump's method of operating.

US-Russia-Ukraine Negotiations

President Trump has held talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine. Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory, saying that Ukraine will not accept deals made without its involvement. Trump has made concessions to Russia, saying that US troops will not defend Ukraine, Russia might be able to keep land taken by force, and Ukraine will not be able to join NATO. Zelenskyy has stressed the need for extensive discussions to prepare for any end to the conflict, saying that Ukraine needs real security guarantees. US Vice President JD Vance has said that the US seeks a "durable" peace, but has not responded to questions about Ukraine's potential NATO membership.

Middle East Ceasefire

Israel and Hamas have agreed to a fragile ceasefire deal, with three Israeli hostages set to be released in exchange for more than 300 Palestinian prisoners. The war could resume if no agreement is reached on the more complicated second phase, which calls for the return of all remaining hostages captured in Hamas' attack on Oct. 7, 2023, and an indefinite extension of the truce. Trump's proposal to remove 2 million Palestinians from Gaza and settle them elsewhere in the region has thrown the truce's future into further doubt, with Hamas potentially unwilling to release any more hostages if it believes the war will resume. The captives are among the only bargaining chips Hamas has left.

US-Europe Divide at Munich Security Conference

The Munich Security Conference has highlighted the growing divide between the US and Europe, with US Vice President JD Vance criticising European leaders for their handling of various issues. Vance has railed against censorship and mass migration in Europe, downplaying other threats such as those posed by Russia and China. He has scolded European leaders for efforts to censor disinformation on social media, specifically lambasting the United Kingdom for charging a man who silently prayed near an abortion clinic. Vance has also complained about mass migration, pointing to an asylum-seeker who was suspected of ramming his car into a crowd in Munich. He has said that mass migration is the most urgent challenge facing Europe, and has called for a change of course to take civilisation in a new direction.


Further Reading:

Ex-PM Major warns of ‘dangerous world’ if US does not stand behind allies

Ex-PM Sir John Major warns of ‘dangerous world’ if US does not stand behind allies

John Major warns of ‘dangerous world’ if US does not stand behind allies

Macron calls emergency European summit on Trump, Polish minister says

Middle East latest: 3 Israeli hostages and over 300 Palestinian prisoners are set to be exchanged

Trump signs order on Covid vaccine mandates; Vance, Rubio meet with Ukraine's Zelenskyy - NBC News

VP JD Vance Criticized European Leaders At Munich Security Conference

Volodymyr Zelenskyy: Ukraine’s president calls for creation of ‘armed forces of Europe’ amid fears of reduction in US support

Zelensky calls for creation of 'armed forces of Europe' and warns Trump not to deal with Putin 'behind our backs' over Ukraine's future

Zelenskyy meets with Vance, says Ukraine needs

Themes around the World:

Flag

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.

Flag

Hormuz shock, energy imports risk

Strait of Hormuz disruption and US sanctions dynamics are reshaping India’s crude/LPG sourcing. India imports ~88–90% of oil; ~40–50% transits Hormuz. A US 30‑day waiver enabled Russian cargo offload, raising compliance and price volatility risks.

Flag

Climate regulatory rollback uncertainty

EPA plans to terminate the 2009 greenhouse-gas “endangerment finding,” potentially weakening federal emissions rules for vehicles and other sources. Expected litigation could prolong uncertainty for automakers, energy and logistics firms, and ESG-linked investment decisions, alongside state-level regulation divergence.

Flag

Mega-project FDI and real estate

Ras El Hekma and other Gulf-backed developments are advancing with large-scale infrastructure, hospitality, and industrial zones. These projects can improve hard-currency buffers and contractor pipelines but also concentrate execution, land, and permitting risk; supply chains should monitor local content and payment terms.

Flag

Municipal service delivery and arrears

Municipal non-payment to Eskom exceeds R110bn, prompting potential supply interruptions in 14 municipalities, including industrial nodes. Weak local governance also drives water outages and emergency procurement risks. Businesses must plan for localised power/water interruptions, billing changes and higher compliance burdens at municipal level.

Flag

Aviation access and labor disputes

Ben Gurion’s phased reopenings and potential aviation-sector labor action increase uncertainty for executive travel, air cargo, and just-in-time shipments. Firms should diversify routing via regional hubs and pre-negotiate contingency capacity for high-value goods.

Flag

China-Derisking und Technologiekontrollen

EU und Berlin verschärfen Sicherheits- und Technologiepolitik gegenüber China, u.a. bei 5G/6G, Cloud und kritischer Infrastruktur; Huawei bleibt dennoch in EU-Forschungsprojekten bis 2027–2030 eingebunden. Unternehmen müssen Compliance, Exportkontrollen, IP-Schutz und Retorsionsrisiken neu bewerten.

Flag

Maritime disruption via Hormuz

Conflict-driven avoidance of the Strait of Hormuz is disrupting shipping and creating war-risk surcharges and rerouting. Japanese carriers paused transits, raising lead times and freight costs for Japan-linked supply chains, especially energy, chemicals, and re-export manufacturing flows.

Flag

Political and security tightening post-election

Post-election tensions around opposition figures and security deployments elevate operational risk: protest disruption, permit uncertainty, and heightened scrutiny of NGOs/media. For investors, governance risk can affect licensing timetables, security costs, and reputational exposure in sensitive sectors.

Flag

Yen volatility and rate hikes

Authorities signal vigilance over yen weakness amid BOJ tightening. Policy-rate rises and FX swings affect import costs, pricing, and hedging. Tokyo core inflation eased to 1.8% y/y while underlying remained ~2.5%, keeping uncertainty over further hikes and growth.

Flag

Mining sector liberalization and expansion

Saudi mining is scaling fast under Vision 2030: Ma’aden posted 2025 profit up 156% to SR7.35bn and record phosphate output (6.72m tonnes). New licenses and improved global rankings signal opportunities in minerals, services, and downstream processing.

Flag

FDI surge into high-tech

FDI disbursement hit USD 3.21bn in Jan–Feb 2026 (+8.8% YoY), with 82.7% going to manufacturing/processing. Rising investment in electronics, semiconductors and green industrial parks upgrades Vietnam’s supply-chain role, but intensifies demand for land, skills, and compliant operations.

Flag

Expanded Section 301 enforcement

USTR is launching faster Section 301 investigations targeting forced labor, excess capacity, subsidies, digital taxes, and discrimination against US tech. Findings can trigger country- or sector-specific tariffs, reshaping sourcing decisions and increasing compliance, traceability, and documentation burdens.

Flag

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.

Flag

War-driven fiscal and supply reorientation

Russia’s war economy prioritizes defense output and logistics resilience, while export patterns concentrate on China, India and Turkey (around 93% of seaborne crude). This reorientation changes market access, increases geopolitical conditionality in trade, and creates sudden regulatory barriers for Western firms.

Flag

Political consolidation and anti-corruption drive

National Assembly elections remain overwhelmingly party-dominated (~93% party candidates), while leadership signals intensified anti-corruption focus. This supports governance credibility but can slow approvals, heighten enforcement uncertainty and increase compliance demands for licensing, procurement and local partnerships.

Flag

Hormuz security and war risk

Conflict-driven threats around the Strait of Hormuz are disrupting traffic, with vessels attacked and war-risk cover withdrawn by major P&I clubs. Higher premiums, rerouting, and delays raise landed costs for energy and all Gulf-linked cargo, complicating scheduling and inventory planning.

Flag

Revisión T-MEC y aranceles

La revisión 2026 del T‑MEC abre riesgo de endurecer reglas de origen, frenar transbordo y elevar verificaciones; persisten aranceles estadounidenses (50% acero/aluminio/cobre; 25% camiones; 17% jitomate). Esto afecta decisiones de inversión, costos y continuidad de exportaciones.

Flag

Investment climate amid persistent uncertainty

Despite resilience narratives, repeated escalations elevate country risk premiums, delay capex, and complicate M&A and project finance. Growth expectations are being revised with conflict-duration sensitivity; firms should anticipate more conservative valuations, stronger covenants, and higher insurance costs for assets and personnel.

Flag

Energy and LNG price contagion

European gas and oil benchmarks react quickly to Gulf insecurity, even without physical outages, as risk premia surge. Higher energy input costs pressure European industry margins, complicate hedging, and can trigger demand destruction or emergency subsidy interventions.

Flag

Red Sea ports absorb reroutes

Shipping lines are opening bookings to Jeddah-area Red Sea ports, with estimates of +250,000 containers and 70,000 vehicles per month. Capacity and inland connections improve resilience, but congestion risk, longer Asia transits (60–75 days), and cost inflation rise.

Flag

National gas reservation rollout

Canberra is designing a national gas reservation (15–25% of new production from 2027), now flagged to cover Northern Territory LNG projects like Ichthys/Barossa. Policy uncertainty affects LNG project economics, domestic energy costs, and manufacturing competitiveness across supply chains.

Flag

Parallel imports and gray-market proliferation

Sanctions have shifted trade into gray channels, exemplified by large volumes of foreign-brand vehicles moving via China as “zero‑mileage used” cars. This expands counterfeiting, warranty and IP risks, complicates aftersales obligations, and increases enforcement and contract risks for global OEM ecosystems.

Flag

Export logistics: Black Sea and Danube

Maritime access remains volatile as port strikes and naval risks raise freight, security, and insurance premiums. Firms diversify via Danube, rail, and EU “Solidarity Lanes,” but capacity bottlenecks and border friction can delay deliveries and complicate export contracts.

Flag

Energy Costs and Industrial Competitiveness

Persistently high electricity prices and policy-driven levies weigh on energy-intensive manufacturing, accelerating investment delays and offshoring. Berlin’s industrial power-price measures and tax reductions may help, but uncertainty over long-term energy strategy remains a key operational risk.

Flag

EV supply-chain reshuffling via tariffs

New Canada–China EV quotas and Canada’s counter-tariffs on U.S.-made vehicles are forcing manufacturers to re-route production. Tesla’s reported shift from U.S.-built to China-built supply illustrates how tariff arbitrage can disrupt inventories, pricing, and supplier contracts across North America.

Flag

Weak inflation, rate cuts, tight credit

Bank of Thailand cut the policy rate to 1.0% amid 10–11 months of negative headline inflation and sub-potential growth projections. Baht strength/volatility and cautious lending—especially to SMEs—affect pricing, demand, FX hedging, and working-capital conditions for exporters and importers.

Flag

Energy revenue swings and fiscal strain

Budget stability remains tied to discounted hydrocarbon exports, exchange-rate dynamics and war-driven spending. Oil price shocks (e.g., Hormuz disruption) can boost receipts, yet deficits and rule changes persist, raising risks of higher taxes, payment delays, and reduced civilian procurement opportunities.

Flag

Large infrastructure spend and PPP pipeline

Government plans about R1.07 trillion over three years for transport, energy and water, with revised PPP rules and infrastructure bonds. This creates opportunities for EPC, finance and suppliers, but execution risk, procurement disputes, and governance capacity remain key constraints.

Flag

Power-grid upgrades for EEC growth

Electricity transmission constraints in the Eastern Economic Corridor are being addressed through Egat’s 31bn baht upgrades, raising transfer capacity to 1,150MW from 600MW. With BOI projecting 16 new data centers needing ~3,600MW (2026–2030), grid readiness and clean-power access shape project timelines.

Flag

Supply-chain rerouting via third countries

Firms are increasingly routing trade and investment through ASEAN, South Asia and Mexico to manage tariffs and market access. Data show North/East Asia-to-ASEAN/South Asia trade flows up ~44% (2019–2024), while Chinese exports to these regions rose ~57%, complicating rules-of-origin compliance and enforcement exposure.

Flag

EV incentives, China brand rise

Battery‑electric demand is muted despite a promised Umweltbonus up to €6,000 announced in January but only appliable from May, delaying private purchases. Commercial sales dominate (68.5%). Chinese brands reached 2.97% market share Jan–Feb 2026, intensifying competitive pressure.

Flag

Cumplimiento laboral y auditorías

Washington mantiene foco en la aplicación laboral del T‑MEC y podría endurecer requisitos (p. ej., mayor “labor value content” y mecanismos preventivos). Para empresas, aumenta el riesgo de quejas, inspecciones en planta, interrupciones operativas y costos de relaciones laborales y trazabilidad.

Flag

Growing IT and services exports

IT exports rose ~20% YoY to $2.6bn in 7MFY26, with FY26 targets of $4.5–$5bn. This supports FX earnings and creates opportunities in outsourcing, fintech, and digital infrastructure, while requiring clearer regulation, payments reliability, and data/security compliance.

Flag

Federal budget and shutdown disruptions

Recurring funding standoffs and partial shutdowns risk slowing DHS-linked services (ports, TSA/Global Entry, FEMA) and regulatory processing. Businesses face operational delays, staffing uncertainty for contractors, and interruptions to permitting, trade facilitation, and enforcement consistency.

Flag

Aviation And Tourism Demand Volatility

Tourism and aviation expansion continues—Saudia carried ~27m tourists/visitors in 2025 toward a 150m-visitor 2030 target—but regional airspace disruptions are causing periodic route suspensions and reroutings. Businesses reliant on travel, events or air cargo should build redundancy in itineraries and inventory.