Trade Tools Expanding Beyond Goods

Washington is widening trade enforcement through Section 301 probes, including a new investigation into Germany’s pharmaceutical pricing. This signals broader use of tariff-linked legal tools beyond traditional goods disputes, increasing regulatory exposure for healthcare, life sciences, and multinational market-access planning.

External Trade Realignment Pressures

South Africa is navigating sharper geopolitical trade pressures from both China and the United States. China’s temporary zero-tariff opening offers market access, but South Africa still ran a $9.4 billion goods deficit with China in 2024, underscoring dependence and bargaining asymmetry.

Critical Minerals Alliance Expansion

Australia’s new US critical-minerals pact commits US$1 billion from each side within six months, targeting deposits valued at US$53 billion. It strengthens non-China supply chains, encourages downstream processing investment, and raises Australia’s strategic importance for battery, defence, and technology manufacturers.

Red Sea Bypass Logistics Push

Saudi Arabia is accelerating overland and Red Sea-linked alternatives to maritime chokepoints, including a Türkiye-Jordan-Syria rail and logistics corridor. Planned investment is about $5.5 billion, with transit to Europe potentially falling from over 30 days by sea to under two weeks.

Corporate Insolvencies and Credit Stress

German business failures are rising sharply, reflecting weak demand, elevated costs, and prolonged stagnation. Creditreform counted about 12,900 corporate insolvencies in first-half 2026, up nearly 8% year on year, with estimated creditor losses of €28.5 billion and 165,000 jobs affected across supply networks.

Investment Incentives Industrial Upgrading

Government-backed investment promotion and business diplomacy are supporting new industrial projects, including science, innovation, and aircraft MRO development linked to U-Tapao. These initiatives improve Thailand’s appeal for higher-value manufacturing and services, though execution capacity and policy continuity remain critical for investors.

Inflation and rate uncertainty

Inflation held at 2.8% in May, but services inflation rose to 3.7% and the Bank Rate remains 3.75%. Businesses face volatile borrowing costs, cautious consumer demand, tighter financing conditions and delayed investment decisions across trade-exposed sectors.

Reform Agenda Changes Business Climate

The Merz government is preparing reforms across taxes, labor markets, pensions, bureaucracy and industrial energy support. Proposed measures include faster permitting, corporate relief and longer working lives, potentially improving investment conditions but also creating near-term policy uncertainty for employers and investors.

Migration Housing Capacity Pressures

Net overseas migration remains elevated at about 301,000 in 2025, with debate intensifying over housing capacity and labor-market dependence. Persistent rental shortages, including a 1.2% national vacancy rate, increase operating costs, wage pressure and political risk for employers and investors.

Steel Safeguards and Trade Frictions

Recent negotiations around UK steel safeguard measures underline continued use of sector-specific trade defenses even alongside new trade agreements. Manufacturers, metals traders and downstream users should prepare for quota management, tariff risks and possible input-cost volatility across industrial supply chains.

US Trade Frictions Persist

Washington plans to approve 18 Indonesian tariff-exclusion requests, yet an additional 10% tariff remains under Section 301. Unresolved disputes over Indonesia’s import licensing and U.S. metal tariffs sustain uncertainty for exporters, agribusiness, and firms dependent on stable bilateral market access.

Energy corridor volatility

Regional conflict continues to affect energy markets through pressure on the Strait of Hormuz and spillovers into Red Sea routes. Israel’s economy remains partly cushioned by gas exports to Egypt and Jordan, but import costs and industrial planning remain vulnerable.

Nickel Nationalism Hits Investment

Indonesia’s tighter nickel quotas, higher royalties and shifting export controls have unsettled foreign investors, especially Chinese firms that have invested over US$65 billion, raising costs, delaying expansion and complicating EV battery, metals and smelter supply chains.

Power and fuel security

Electricity constraints remain a core operating risk, compounded by fuel import dependence and thin strategic reserves. Pretoria plans 60 days of petroleum stocks, but South Africa still imports about 90% of crude and fuel products, exposing transport, manufacturing, aviation, and mining to disruption.

Trade exposure to tariff shifts

External trade conditions remain volatile. South Africa’s US tariff rate may fall from 30% to 12.5%, but shipments to the US were already down 56% year on year through April. Exporters still face uncertainty from Washington’s fast-changing trade enforcement approach.

Hormuz Transit Risk Persists

Despite partial shipping normalization, Iran continues issuing conflicting statements and route demands in the Strait of Hormuz, through which roughly 20% of global oil passes. Freight rates, war-risk insurance, vessel routing, and inventory planning remain highly sensitive to renewed disruption.

Migration Rules Distort Labour

Proposed settlement and visa changes are creating uncertainty for employers reliant on foreign labour, especially care, healthcare, construction and engineering. With around 111,000 care vacancies in England and migrant staff near 30% of the workforce, labour shortages may intensify.

Turkey-Gulf Land Corridor

Turkey and Saudi Arabia signed logistics and railway memorandums to build an overland corridor via Syria and Jordan, potentially cutting Gulf-Europe transit from over 30 days to under two weeks. If implemented, it could materially improve supply-chain resilience and Turkey’s logistics-hub role.

High Rates, Sticky Inflation

Urban inflation eased to 14.6% in May from 14.9% in April, but monthly inflation rose 1.6%, keeping pressure on households and operating costs. With rate cuts likely delayed, companies should expect expensive local financing, currency caution, and restrained consumer demand.

Energy Security Under Strain

Taiwan’s power outlook is a growing business risk as AI, semiconductors, and data centers lift demand while LNG import dependence remains high. Recent disruption to Qatari gas and debate over nuclear restart highlight cost, resilience, and continuity concerns for industry.

Conflict Spillover Threatens Operations

Iran’s regional links to Hezbollah, the Houthis, and wider Middle East flashpoints keep ceasefires fragile. Security incidents in Lebanon, Red Sea shipping disruptions, and renewed U.S.-Israeli tensions can quickly trigger new sanctions, transport interruptions, workforce risks, and abrupt deterioration in business continuity conditions.

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.

Energy Price and Inflation Shock

Conflict-linked oil volatility has pushed inflation back into double digits and increased import, freight, and operating costs. As an energy importer, Pakistan remains exposed to Hormuz disruption, higher petroleum levies, and tariff pass-through, affecting manufacturing margins, transport, and consumer demand.

Water And Industrial Inputs

TSMC has warned that water remains a constraint alongside power, land, labour, and talent. Taiwan’s history of severe drought and reliance on stable industrial utilities creates operational risk for fabs and manufacturers, especially in southern clusters supporting advanced semiconductor production.

Data Centre Infrastructure Strain

AI-led data-centre expansion is accelerating, with roughly 50 major facilities already in Melbourne and up to A$155 billion of investment reportedly in the pipeline nationally. Rising electricity and water demand, community backlash and emerging planning rules could materially affect digital infrastructure, utilities and permitting timelines.

China Dependence in Exports

Brazil’s trade profile remains heavily tied to Chinese demand for soybeans, iron ore, oil, and other commodities. This underpins export earnings and logistics flows, but also leaves suppliers, miners, shippers, and investors exposed to Chinese demand swings, pricing shifts, and geopolitical trade disruptions.

Tighter AI Chip Export Controls

Taipei is moving toward stricter controls on advanced AI chip exports to China, with possible legal changes and criminal penalties for circumvention. For semiconductor, electronics, and server companies, this raises compliance costs, licensing scrutiny, and rerouting risks across cross-strait supply chains.

Carbon Border Costs on Exports

South African manufacturers face rising carbon-related trade costs from the domestic carbon tax and the EU’s CBAM. With carbon tax at R190 per tonne and EU certificates around €70-€100, exporters, especially automotives, face margin pressure and competitiveness risks.

Revisión T-MEC prolonga incertidumbre

La revisión del T-MEC domina el panorama empresarial: Trump plantea no renovarlo y abrir revisiones anuales, aunque el acuerdo seguiría vigente. Con alrededor de US$872.8 mil millones en comercio México-EE.UU. en 2025, la incertidumbre ya retrasa inversión manufacturera, decisiones logísticas y planes de nearshoring.

Manufacturing Overcapacity Drives Friction

China’s industrial model continues to generate strong export surpluses and global trade tension. Its 2025 trade surplus reportedly reached $1.2 trillion, while overcapacity in EVs, batteries, solar and machinery is prompting more anti-dumping probes, tariffs and defensive industrial policy in key export markets.

Critical Minerals Supply Realignment

US-China rivalry is pushing South Korean firms to redesign sourcing beyond cost efficiency toward security and resilience. Critical-mineral procurement, stockpiling and overseas investment are becoming strategic priorities, with implications for batteries, electronics, advanced manufacturing and long-term capital allocation decisions.

Election-year populism raises compliance risk

With October elections approaching, pressure is rising for tax exemptions, municipal transfers, wage floors, and sectoral benefits. Businesses should expect more volatile policymaking, heavier lobbying by domestic interests, and increased need to monitor legal, tax, labor, and procurement exposures.

China Tightens Critical Minerals

China’s export restrictions on dual-use items and rare earths to Japan have intensified supply insecurity. March and April shipments reportedly fell 88% and 82% year on year, threatening semiconductors, medical equipment, electronics, and broader high-value manufacturing supply chains.

Semiconductor Capacity Builds Momentum

Fresh chip investment, including MiPhi’s planned Rs 1,000 crore expansion in Greater Noida, signals stronger domestic capability in memory, enterprise storage and automotive electronics. For multinationals, this improves medium-term resilience, local sourcing options and India’s attractiveness for advanced manufacturing.

Europe-China Trade Frictions Deepen

EU-China trade tensions are intensifying across EVs, batteries, solar, medical devices and procurement. With the EU’s 2025 goods deficit with China at about €360 billion, Brussels is considering tougher protections, increasing tariff, compliance and retaliation risks for multinationals serving both markets.