China-plus-one model under pressure

Vietnam remains a major beneficiary of supply-chain diversification from China, but that model is now under sharper US examination. Companies may face tougher scrutiny distinguishing legitimate production relocation from pass-through trade, increasing due-diligence costs for foreign manufacturers and investors.

US tariffs squeeze manufacturers

High U.S. import tariffs are reducing demand for German goods and compounding pressure on export-led industries. First-half German exports to the United States fell 6.5% to €72.8 billion, undermining revenue planning, production volumes, and investment assumptions for transatlantic-oriented businesses.

Tariff volatility clouds planning

Renewed US tariff activism continues to unsettle Vietnamese manufacturing and export planning, with reported reciprocal tariff levels on Vietnam previously reaching 46%. Continued legal and political uncertainty around US trade measures complicates investment timing, pricing, and long-term customer commitments.

IMF Programme Driving Structural Reforms

An IMF mission arrives next month for the fourth EFF review, with $1.2 billion disbursement at stake. Key conditions include circular debt reduction, energy sector privatization, tax collection, and governance reforms. Pakistan has received $4.8 billion of its $7 billion programme to date.

Critical Minerals Bargaining Intensifies

The United States is reportedly seeking preferential access to Canadian critical minerals as part of a broader trade package also covering energy and security. This elevates resource policy into trade negotiations, with implications for mining investment, offtake agreements and strategic partnerships.

Eastern Mediterranean gas integration

Egypt is positioning itself to process Cypriot Kronos gas through existing domestic infrastructure before liquefaction at Damietta, with 1.4 million tons of LNG annually referenced. This reinforces Egypt’s role in cross-border energy logistics, trading, and export-oriented infrastructure utilization.

Selective industrial investment continues

Despite trade friction, manufacturers are still expanding in Mexico, including Inventec’s $450 million Ciudad Juárez expansion expected to create up to 6,000 jobs and Embraer’s new Chihuahua plant. The pattern suggests Mexico remains attractive, but investors are becoming more selective and risk-sensitive.

Red Sea route diversification plans

Israel is discussing pipeline connectivity with Gulf partners to bypass Hormuz and Bab el-Mandeb disruptions. The existing Eilat-Ashkelon line and proposed Saudi-Israel links could improve energy-routing resilience, though diplomatic hurdles and vulnerability of terminals to missiles and drones remain significant.

Energy diversification offers limited protection

Recent reporting suggests India’s diversification away from West Asian crude toward Russian supply has not eliminated vulnerability, because both routes depend on stressed maritime corridors. LPG remains more exposed, with around 60% imported and storage measured in weeks rather than months.

Steel Aluminum Lumber Exposure

Canada is seeking relief from existing Section 232 tariffs on steel, aluminum, lumber, and autos, while possible quota arrangements remain under discussion. Continued restrictions threaten export volumes, margins, and manufacturing competitiveness across North American industrial supply chains.

Transshipment scrutiny on China links

A White House report placed India in a top-tier transshipment-risk category for possible China-linked rerouting, without imposing new tariffs. Even so, exporters using Chinese inputs may face tighter origin checks, heavier documentation demands, and greater customs-compliance risk.

Section 301 Tariffs Face Legal Challenge

Twenty-five US states sued to block 10-12.5% tariffs on 60 trading partners covering 99.4% of imports, arguing forced-labor rationale is pretextual. Legal uncertainty creates massive compliance risks for importers with no established refund mechanism if tariffs are overturned.

Public finance stress intensifies

France’s fiscal position is worsening, with public debt above €3.5 trillion, debt service around €34.5 billion in the first half and the state deficit roughly €106.8-110 billion. Higher sovereign financing costs could pressure taxation, subsidies and public procurement conditions.

Green industrial parks gain priority

Dong Nai is promoting ecological and smart industrial parks as a strategic growth engine, targeting renewable-energy use, direct power purchase mechanisms, and circular manufacturing. With FDI accounting for 82-83% of industrial park capital there, greener standards will increasingly shape site selection.

New border transport links

Among five Turkey-Iraq agreements, railway and road transport via the Ovakoy-Fishkhabur crossing stands out for freight movement. Expanded border infrastructure could improve land access into Iraq and onward markets, but will also shift route economics for shippers and logistics investors.

Industrial relations negotiation risk

Labor confederations are pressing for repeal of three Omnibus Law implementing regulations and warning against rushed drafting, while lawmakers pledge tripartite talks with Apindo. This raises risks of strikes, compliance changes, and shifting employment costs across manufacturing and services.

China Exposure Keeps Falling

Taiwan’s economic reorientation away from China is becoming structurally significant: the share of outbound investment going to China fell from 83% in 2010 to 0.9% in 2024, supporting friend-shoring and alternative production strategies for democratic-market partners.

Fuel import reversal emerges

Russia has begun importing gasoline from India for the first time, with initial cargoes of about 42,000 tons routed via ship-to-ship transfers near Egypt, underscoring severe domestic imbalance and new complexity for sanctions compliance, shipping, and regional fuel markets.

North Sea approvals unresolved

Government consultations on Jackdaw and Rosebank have intensified uncertainty over UK oil and gas investment. Industry argues Jackdaw could supply more than 6% of UK gas at peak and support jobs, while delays risk deterring capital and weakening energy security.

Calibrated deterrence with diplomacy

Riyadh is combining limited strikes on Iran-backed militias with Oman-mediated talks to contain the Houthis and avoid broader war. This dual-track posture reduces immediate escalation risk, but leaves businesses exposed to sudden policy shifts, security incidents and uneven operating conditions.

Fuel Security Drives Refining

Australia is backing a A$4 million feasibility study for a new Western Australia refinery after years of closures left it importing about 90% of liquid fuels. Middle East conflict-driven price spikes are intensifying inflation, energy-security planning, and industrial policy responses.

Supply chain compliance costs rise

China is deploying a broader legal toolkit, including export controls, entity sanctions, national-security investigations, and certification restrictions. Multinationals may face higher due-diligence, auditing, and product-testing costs, especially where China-linked supply chains intersect with U.S. or allied regulatory regimes.

Strategic Sectors Cooperation Expands

Despite tariff friction, US-India cooperation is broadening in defence, civil nuclear energy, and trusted AI. Bilateral goods trade reached about $141 billion in 2025, and sectoral openings could still support cross-border investment, technology partnerships, and resilient supply chains.

Capital markets financing expansion

Authorities are pushing to deepen capital markets and mobilize international financing for infrastructure, green transition, and digital transformation. With the stock market at 82.3% of GDP and corporate bonds at 22.1%, financing options are broadening for investors and large projects.

ASEAN engagement supports diversification

The UK is doubling down on ASEAN ties, adopting a new five-year action plan through 2031 and emphasizing trade, maritime security and economic resilience. For international firms, this reinforces UK support for Indo-Pacific diversification, alternative sourcing and broader post-Brexit trade network development.

Broad Canada-US Trade Bargaining

Negotiations now extend beyond immediate tariff relief into a broader package covering autos, dairy, alcohol, procurement, defense, energy, critical minerals, and future USMCA talks. Businesses face heightened policy uncertainty as market access terms could shift across multiple regulated sectors.

US Investment Commitments Pressure

Washington is tying trade negotiations to implementation of South Korea’s $350 billion U.S. investment pledge, while Seoul prepares initial project announcements in shipbuilding and energy. This raises capital allocation pressure, execution risk, and possible diversion of corporate investment from domestic operations.

Automotive market share pressure

Chinese brands captured 47.2% of new EU plug-in hybrid registrations in the second quarter, while German carmakers face falling competitiveness. The resulting pressure is accelerating calls for protection, restructuring, and supplier adaptation across Europe’s most important manufacturing ecosystem.

US tariff and transshipment risk

US customs inspections of Chinese-linked factories in Vietnam and stalled bilateral talks over transshipment, IP, and non-tariff barriers have raised the risk of additional Section 301 tariffs, threatening exporters, compliance costs, and sourcing strategies for Vietnam-based manufacturing.

Maritime Insurance Cost Surge

Escalating attacks on merchant shipping have sharply increased freight and war-risk premiums across the Black Sea. Insurance for port calls rose to about 2% of vessel value from roughly 1%, making shipments commercially unattractive even where sea lanes remain technically open.

Shadow fleet shipping restrictions

New UK and EU sanctions targeted Russia-linked tankers and shipping facilitators, including 41 vessels under EU services bans and six vessels under UK measures. Tighter port access, servicing and insurance restrictions raise maritime logistics costs and delivery uncertainty.

Data centre regulation tightening

Thailand is drafting legislation for data centre investment, focusing on water use, pollution and environmental standards while still promoting itself as an AI and data-centre hub. Regulatory uncertainty may affect site selection, permitting speed, utility planning and infrastructure investment decisions.

Batam Emerges as Manufacturing Relocation Hub

US-China tariff escalation has transformed Batam into a global manufacturing destination, with exports doubling to $19.6 billion by 2025. Apple, Nvidia, and Chinese firms are investing in its free trade zone, while economy grew 6.8% in 2025, outperforming national growth rates.

Rare earth leverage threatens supply

US officials pressed China to honor rare-earth commitments as earlier controls on seven heavy rare earths exposed major vulnerabilities. The IEA warned full implementation could endanger USD 6.5 trillion in annual downstream production, prompting stockpiling, diversification, and higher sourcing costs globally.

Macroeconomic strain constrains business

Fuel shortages, weaker growth, and tighter financing are compounding pressure on Russian businesses, with GDP growth forecasts cut to 0-1%, inflation projected at 6-7%, and higher VAT and borrowing costs worsening margins, cash flow, and investment conditions.

Iraq oil corridor expansion

Turkey and Iraq signed a one-year pipeline accord covering 750,000 barrels per day via Ceyhan, while negotiating a longer-term framework. Planned expansion toward Basra and fuller use of 1.5 million-bpd capacity could materially reshape regional energy trade and transit economics.