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Mission Grey Daily Brief - February 25, 2025

Summary of the Global Situation for Businesses and Investors

The Russia-Ukraine war continues to dominate the global agenda, with foreign leaders visiting Ukraine to show support on the third anniversary of the conflict. US President Donald Trump's abrupt change in US policy towards Ukraine has raised concerns about the impact on Taiwan and transatlantic relations. Meanwhile, Ukrainian President Volodymyr Zelenskyy has expressed willingness to step down in exchange for peace or NATO membership. The shifting geopolitical landscape presents both risks and opportunities for businesses and investors, particularly in the European and Asia-Pacific regions.

US Policy Shift on Ukraine

US President Donald Trump has reversed three years of American policy towards Ukraine, raising concerns about the impact on Taiwan and transatlantic relations. Trump has falsely claimed that Ukraine should not have started the war and questioned the legitimacy of President Volodymyr Zelenskyy's government. He has also begun direct talks with Moscow and voiced positions similar to the Kremlin's. This abrupt shift has raised concerns about the impact on Taiwan, with some experts suggesting that China might become emboldened to push its territorial claim on Taiwan. However, others argue that Beijing is likely in a wait-and-see mode, monitoring the situation in Europe before making any moves.

Impact on Taiwan

Trump's policy shift has raised concerns about the impact on Taiwan, with some experts suggesting that China might become emboldened to push its territorial claim on Taiwan. Taiwanese officials have questioned whether the US could pull back its support, potentially leaving Taiwan vulnerable. However, others argue that Beijing is likely in a wait-and-see mode, monitoring the situation in Europe before making any moves. Trump's administration has appointed China hawks in top-level positions, including Secretary of State Marco Rubio and Defense Secretary Pete Hegseth. Hegseth has stressed that if the US pulls back support from Ukraine, it will concentrate on the Asia-Pacific region, leaving European defense to Europeans.

Transatlantic Relations

Trump's policy shift has raised concerns about transatlantic relations, with European leaders expressing dismay at Trump's approach and fears of being sidelined in efforts to secure a peace deal. European leaders have emphasized the importance of consulting Ukraine and Europe in any peace negotiations and thwarting Putin's ambitions. European Council President Antonio Costa has announced an emergency summit of EU leaders in Brussels on March 6, with Ukraine at the top of the agenda. European leaders have stressed the need for Europe to take on more responsibility for its own defense, particularly in the face of a potential Russian victory.

Zelenskyy's Offer to Step Down

Ukrainian President Volodymyr Zelenskyy has expressed willingness to step down in exchange for peace or NATO membership. This offer comes amid escalating tensions with US President Donald Trump, who has accused Ukraine of starting the conflict and blamed predecessor Joe Biden and Zelenskyy for not stopping the fighting sooner. Zelenskyy has hit back, accusing Trump of being in a "disinformation space", straining ties at a pivotal moment in the conflict. Analysts suggest that confronting Trump might not be the best approach, as it could lead to further escalation.


Further Reading:

Foreign leaders visit Ukraine to show support on war’s 3rd anniversary

Foreign leaders visit Ukraine to show their support on Russia-Ukraine war’s third anniversary

Three Years Into Russia-Ukraine War, A Look At Where Their Economies Stand

Trump meets with French President Macron as uncertainty grows about US ties to Europe and Ukraine

Trump will meet French and UK leaders as uncertainty grows about US ties to Europe

Trump will meet French and UK leaders as uncertainty grows about US ties to Europe and Ukraine

Trump's abrupt change of US policy on Ukraine raises questions about Taiwan support

Trump’s abrupt change of US policy on Ukraine raises questions about Taiwan support

Western leaders visit Kyiv and pledge military support against Russia on the war’s 3rd anniversary

Zelenskyy Says 'Ready To Step Down' As President In Exchange For NATO Membership For Ukraine

Themes around the World:

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Defense Exports Support Manufacturing

French defense exports remain strong, with €21.24 billion in 2025 orders and India alone accounting for €6.9 billion via 26 Rafale-M jets. Aerospace represented about 40% of orders, supporting production continuity, technology transfer and higher-value industrial activity.

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Pak-Iran Pipeline Arbitration Exposure

The government has formed a high-level committee to address the stalled Pakistan-Iran gas pipeline as arbitration proceeds in Paris. The case creates legal and financial uncertainty around future energy sourcing, potential liabilities, and sanctions-sensitive infrastructure decisions affecting long-term investors.

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Canada Diversifies Trade Partners

Prime Minister Mark Carney says Canada will reduce dependence on the U.S. and pursue new trading relationships abroad, including deeper ties with the European Union. This shift could reshape market access priorities, customer diversification plans, and long-term export strategy.

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Municipal and transport digitalisation

Articles on online taxi licensing, AI-enabled monitoring, smart licensing centres and integrated transport systems show a push to digitise public services. For businesses, successful implementation could reduce downtime, corruption and administrative friction, while failures would leave bottlenecks largely unchanged.

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IMF Review Tightens Policy Discipline

Pakistan’s September IMF review will scrutinize governance, SOE reforms, sovereign wealth fund rules, anti-corruption measures and fiscal safeguards under the $7 billion EFF. Outcomes will shape access to financing, reform credibility and investor confidence across sectors.

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Regulatory change for data firms

Reform UK’s pledge to scrap the UK GDPR highlights a live policy debate over privacy regulation, small-business compliance, and digital competitiveness. Any major divergence could threaten the UK’s EU data adequacy status, disrupting cross-border data flows and legal certainty.

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Busan Truce Extension Likely

China and the United States are negotiating an extension of the Busan trade truce, with possible tariff reductions, paused export controls, and continued rare earth suspensions. The talks suggest short-term stability, but only on a managed and fragile basis.

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Rare Earth Controls Hit Industry

China’s export restrictions on rare earths and dual-use materials are disrupting Japanese high-tech, EV and defense supply chains. Reports show some key inputs, including dysprosium, terbium and yttrium, have fallen to zero or near-zero, raising sourcing risk and production delays.

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Labor Rules Become Negotiation Front

Mexico’s labor ministry says it will not accept USMCA Chapter 23 changes unless the Rapid Response Labor Mechanism becomes reciprocal. It is also preparing a pilot against forced labor in agro-exports, adding compliance pressure for manufacturers and agribusiness.

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Hormuz shipping disruption escalates

Strait of Hormuz traffic has fallen sharply, with commodity vessel crossings dropping into single digits on some days and oil flows reportedly down from over 20 million to about 8 million barrels daily, sharply raising freight, insurance and supply-chain disruption risks.

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Presidential race and pro-business policy

France’s 2027 presidential contest is already shaping expectations on taxes, labor costs, and regulation. Candidates are debating simplification, production taxes, and state planning, while business leaders remain pessimistic, with 82% expecting adverse economic policy effects.

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Security volatility affects commercial planning

Cuts to US-South Korea exercises, uncertainty over force posture, and renewed Trump-Kim diplomacy are feeding broader geopolitical volatility. For business, that can influence currency sentiment, board-level risk assessments, inventory strategies and contingency planning across regional manufacturing and logistics networks.

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Trade Sovereignty Shapes Negotiations

A central dispute is Canada’s refusal to accept US demands limiting its ability to strike future trade deals or align automatically with third-country tariffs. That sovereignty issue now influences investment confidence, long-term planning and the durability of any North American accord.

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Expo 2030 Drives Supplier Demand

Riyadh’s first international participant meeting for Expo 2030, with 135 of 197 countries already confirmed, signals an early-stage procurement cycle. Businesses in construction, hospitality, logistics, and event services may benefit from long lead-time contracting opportunities.

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India-EU Trade Pact Advances

The India-EU free trade agreement has moved to final approval, with signing expected by end-2026. It promises zero duties on about USD 33 billion of Indian exports, stronger mobility rules, and more predictable market access for exporters and investors.

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CUSMA Reliability Under Strain

Recent reporting says the new tariffs apply to goods covered by CUSMA, marking a major break from the tariff-free environment that had covered most Canadian exports. Businesses now face higher legal and commercial uncertainty around the durability of North American trade rules.

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Reconstruction partnerships attract capital

Ukraine is actively pitching U.S. and other foreign investors on public-private partnerships in ports, rail, roads and municipal infrastructure, including projects linked to the U.S.-Ukraine Reconstruction Investment Fund, creating selective long-term entry opportunities despite wartime risks.

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Maritime Surveillance Gaps Persist

Experts warn Taiwan’s coastal monitoring remains insufficient despite more than NT$29.5 billion allocated to strengthen maritime intelligence and 451 drones planned for procurement. Persistent gray-zone incursions and AIS spoofing keep shipping, offshore infrastructure, and logistics operators exposed to disruption and security uncertainty.

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Logistics Corridors Expand Regional Trade

Saudi Arabia’s new transport cooperation with Syria and broader Gulf corridor efforts point to stronger land, rail and cross-border freight links. For international businesses, this could reduce transit frictions, improve market access, and reshape route choices for trade flows.

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Australia Deepens China Trade Balancing

Australia has removed trade barriers on about A$20 billion of exports while keeping AUKUS, foreign-interference laws and critical-infrastructure controls intact. Businesses tied to China should expect continued market access opportunities, but also persistent political and security-driven scrutiny.

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Russia Tensions and LNG Dependence

Tokyo’s response to Russia’s Kuril Islands moves is constrained by continuing dependence on Russian LNG, which reportedly accounted for about 9% of annual imports. Geopolitical tensions therefore carry direct implications for sanctions risk, energy procurement, and contingency planning across Japan-based operations.

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Secondary sanctions widen financial risk

Washington’s intensified secondary sanctions campaign, including actions against Banque Misr’s UAE branches and warnings of weekly new measures, expands compliance risk beyond Iran. International firms face heightened due diligence burdens, payment delays, and potential de-risking by banks.

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Investment Relocation Incentives

Trump’s call for Canadian companies to move operations into the United States, combined with tariff exemptions for domestic production, is creating strong incentives to re-scope investment plans. Multinationals may accelerate U.S. capacity, but at the cost of capital efficiency and regional diversification.

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Semiconductor Investment Rebalancing

Taiwan’s chip sector remains central, but firms are expanding in the United States and Europe amid tariff threats, investment incentives, and supply-chain diversification. This reshaping affects capex plans, supplier location, and long-term production allocation for exporters and investors.

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Escalating US-Canada Tariff War

Washington and Ottawa have moved from negotiations to retaliation, with 50% US tariffs on Canadian vehicles, parts and steel and Canada’s dollar-for-dollar countermeasures on C$27.6 billion of US goods. The dispute threatens pricing, margins and cross-border sourcing.

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USMCA Uncertainty and Tariffs

Washington’s refusal to extend the USMCA for 16 years has opened a decade of uncertainty, while 25% tariffs on Mexican autos and 50% on steel and aluminum remain in place. For exporters and investors, the priority is securing sectoral relief before U.S. election dynamics harden positions.

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Trade diversification toward Europe

A provisional Mercosur-EU trade agreement is already boosting Brazilian exports to Europe, with reported gains of 26% in the first two months and stronger flows in agriculture and machinery. Firms are accelerating diversification away from the U.S. market.

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Trade diversification beyond China

Bangkok is actively seeking to diversify trade partnerships as its trade deficit with China reached US$46.22 billion in the first half of 2026. Stronger engagement with Australia and other middle powers may reshape sourcing, export promotion, and geopolitical risk exposure.

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Expanded Energy Infrastructure Investment

Turkey says it needs about $80 billion in electricity-grid investment by 2035 and is also expanding LNG, pipelines, Sakarya gas production, and nuclear capacity. These projects support long-term supply security but create major execution, financing, and contractor opportunities.

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Expanded Free Trade With Turkey

Ukraine has ratified a free trade agreement with Turkey, with bilateral trade already around $8.8 billion. The deal opens new market access and joint-production opportunities, but Ukraine’s light industry faces competitive pressure from Turkey’s more developed manufacturing base.

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Origin scrutiny threatens trusted exports

Recent commentary linked Taiwan’s high export volumes to stricter US attention on tariff evasion and transshipment, warning that false Taiwanese origin claims could trigger tougher inspections. Legitimate exporters therefore face rising customs-delay, documentation and reputational risks in key overseas markets.

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Export controls and sanctions retaliation

China is signaling a more targeted retaliation toolkit, including tighter export controls, sanctions on violating entities, trade security reviews, and reduced purchases of U.S. agricultural goods. For multinationals, this raises compliance, sourcing, and counterparty-risk exposure across sensitive sectors.

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North America Trade Bloc Friction

The breakdown in U.S.-Canada talks and new tariffs on Canadian goods increase volatility across North American supply chains. For Mexico, this may improve negotiating leverage with Washington, but also raises the risk of broader regional trade fragmentation.

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Business Taxes And Spending Choices

The government is balancing promised spending cuts with selective support for defense, ecology, education, research and drought-hit agriculture. While ministers publicly resist broad tax increases, debate continues over pension de-indexation, drug reimbursement and possible surtaxes on large companies.

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Migas overhaul centralizes approvals

Indonesia’s draft Oil and Gas Bill would replace SKK Migas with BUK Migas, reporting directly to the President and controlling upstream licensing, contract signing, asset management, and reserve planning. The change could reshape investor engagement, approvals, and governance risk in energy projects.

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Pacific Strategic Competition Intensifies

Australia’s Pacific diplomacy is central to regional stability, with fresh aid pledges, security treaties and pushback against Chinese influence shaping business risk. The contest affects infrastructure access, regulatory alignment, and the operating environment for trade, logistics and investment across the island economies.