Humanitarian Crisis and Aid Access Constraints

Israel’s control over Gaza’s borders and restrictions on humanitarian aid have led to severe shortages and a potential famine. The reopening of the Rafah crossing is anticipated but not guaranteed. These dynamics disrupt logistics, increase compliance risks, and heighten reputational concerns for multinationals.

Renewed Focus on Clean Energy Hubs

France, with North Sea neighbors, is advancing joint offshore wind projects targeting 100 GW by 2050. This initiative aims to attract €1 trillion in investment, enhance energy security, and reduce reliance on Russian and US fossil fuels, positioning France as a leader in Europe’s green transition.

Supply Chain Disruptions and Humanitarian Restrictions

Israeli restrictions on aid organizations and border crossings, especially at Rafah, have disrupted humanitarian flows and supply chains. New registration requirements and ongoing security measures complicate logistics for international businesses and NGOs, raising operational and reputational risks.

Investment Climate Reforms Accelerate

Indonesia’s government has streamlined investment licensing through the OSS system and risk-based regulation, issuing 175 automatic permits in early 2026. These reforms improve investor confidence, reduce bureaucratic delays, and create a more predictable business environment.

Energy Sector Reform and Pemex Challenges

Mexico’s energy sector faces structural challenges, with Pemex’s high debt and underperforming refineries limiting energy independence. While international oil firms are negotiating new projects, contract terms and financial risks remain barriers to large-scale foreign investment.

Gaza Conflict Reshapes Regional Stability

The ongoing Gaza conflict and evolving ceasefire arrangements have heightened regional instability, disrupted trade routes, and increased security risks. International businesses face heightened uncertainty, with supply chains, cross-border operations, and investment strategies all affected by the volatile security environment and shifting political alliances.

Gulf Rivalry and Regional Instability

Intensifying competition with the UAE over influence in Yemen, Sudan, and Africa is fueling regional instability and media confrontations. This rivalry complicates diplomatic relations and could impact trade, investment flows, and supply chain security across the broader Gulf region.

Strategic Infrastructure and Chabahar Port

Despite sanctions, Iran continues developing the Chabahar Port and North-South Transport Corridor, vital for regional connectivity and trade with India, Russia, and Central Asia. However, instability and external pressure threaten project timelines and long-term investment returns.

Technology Sector and Digital Transformation

India’s electronics exports reached Rs 4 lakh crore in 2025, with mobile phone and semiconductor manufacturing surging. Major global tech firms are increasing hiring and offshoring to India, driven by US visa restrictions and cost advantages, signaling a structural shift in global supply chains.

Critical Minerals and Geopolitical Competition

Indonesia’s dominance in nickel and tin places it at the center of U.S.-China competition for critical minerals. While new trade frameworks with the U.S. offer market access, there are risks of resource dependency and the need for robust industrial policy to ensure domestic value addition and supply chain security.

Supply Chain Vulnerabilities in Key Sectors

French supply chains, especially in automotive, luxury goods, and agriculture, are exposed to global trade shocks and tariff threats. Disruptions risk profit margins, force supply chain realignment, and may accelerate production shifts abroad, challenging France’s industrial competitiveness.

Energy Transition and Pipeline Politics

Political and regulatory disputes over pipelines, LNG, and oil exports—especially to Asia-Pacific—are intensifying. Indigenous opposition, environmental concerns, and shifting U.S. energy policies complicate project approvals, affecting energy supply chains and long-term investment planning.

Australia-China Trade Relationship Dynamics

Despite ongoing tensions and new Chinese tariffs on beef, the Australia-China trade relationship remains resilient, with China still Australia's largest export market for minerals, agriculture, and services. However, persistent strategic frictions and unpredictability require businesses to manage risks and diversify export destinations.

EU-Mercosur Trade Deal Implementation

The EU-Mercosur free trade agreement, signed in January 2026, will eliminate tariffs on over 90% of bilateral trade, opening a market of 700 million people. This landmark deal is expected to reshape Brazil’s export profile, boost agribusiness, and attract investment, but faces ratification hurdles and opposition from European farmers and environmental groups.

Climate Transition and Fossil Fuel Dependence

Despite climate commitments, South Africa is expanding domestic gas and coal projects, risking stranded assets and exposure to carbon border taxes. This tension between energy security and sustainability creates regulatory uncertainty and reputational risks for international partners and investors.

Shadow Fleet and Sanctions Evasion

Russia has developed a ‘shadow fleet’ of old tankers and parallel logistics to circumvent Western sanctions, shifting trade toward India, China, and Turkey. This opaque system increases operational risks and regulatory scrutiny for international businesses.

Geopolitical Competition With China

Escalating US-China tensions over technology, trade, and critical minerals disrupt global supply chains. China’s green industrial push and export controls on key materials challenge US dominance, forcing firms to reassess sourcing, market access, and risk exposure in Asia-Pacific.

Bioenergy and MSME Supply Chain Challenges

India is promoting bioenergy adoption in MSMEs to decarbonize industrial heat and reduce fossil fuel reliance. However, fragmented biomass supply chains and technology gaps present challenges, requiring policy support and international collaboration for scalable, reliable solutions.

Tariff Preferences and Market Access

Taiwan secured preferential tariff treatment for semiconductors, auto parts, and more, aligning with Japan, Korea, and the EU. This levels the playing field for Taiwanese exports, enhances competitiveness, and provides clarity for long-term investment and supply chain planning.

Property Sector and Domestic Demand Weakness

Despite robust export performance, China’s domestic economy faces persistent headwinds from a prolonged property slump, weak consumer demand, and local government debt. This structural imbalance may limit growth and affect sectors reliant on domestic sales, with implications for both local and foreign businesses.

Energy Transition and Green Ammonia Expansion

Japan is leading Asia in green ammonia co-firing projects and renewable energy investments, targeting decarbonization of power generation. Major projects and international supply agreements position Japan as a regional leader in clean energy, with significant implications for energy-intensive industries and supply chains.

Critical Supply Chain Vulnerabilities

The UK’s over-reliance on China for clean energy components and critical minerals exposes supply chains to geopolitical shocks. Disruptions could threaten up to 90,000 jobs and delay renewable energy projects, prompting calls for domestic production and diversified international partnerships.

Supply Chain and Infrastructure Modernization

Turkey prioritizes infrastructure upgrades, particularly rail-port connectivity and logistics, to enhance export capacity and supply chain resilience. Investments in renewable energy and agriculture support sustainable operations, while modernization efforts reduce bottlenecks for international business.

Competitive Tensions and Strategic Alliances

Major French automakers, including Renault and Stellantis, are expanding their electrified portfolios but show reluctance to fully align on joint battery ventures. This rivalry shapes the pace of innovation, localization of supply chains, and the scope for international partnerships.

Escalating US-South Korea Trade Tensions

The abrupt US tariff hike from 15% to 25% on South Korean autos, pharmaceuticals, and other goods marks a sharp escalation in bilateral trade tensions. This move disrupts supply chains, threatens export competitiveness, and injects volatility into investment strategies, especially in the automotive sector.

Supply Chain Disruptions and Contingency Planning

UK firms face significant supply chain risks from tariff shocks and potential trade war escalation. Business groups urge contingency planning, as higher import costs, border delays, and regulatory divergence threaten profitability, especially for SMEs and multinationals with transatlantic operations.

Shifting International Investment Strategies

Due to domestic uncertainty, 56% of French business leaders now prioritize international expansion, especially in Europe and Southeast Asia. This trend reflects efforts to mitigate local risks, diversify revenue, and secure talent, but may slow France’s domestic reindustrialization agenda.

Labor Market Weakness Amid Policy Shifts

Despite protectionist policies, US manufacturing jobs declined by over 70,000 since April 2024. The labor market remains sluggish, with low hiring rates and increased long-term unemployment, challenging the narrative of a domestic manufacturing resurgence.

Japan’s Strategic US Alignment Deepens

Amid regional uncertainty, Japan is accelerating defense cooperation and supply chain realignment with the US, including a ¥80 trillion ($550 billion) investment plan. This shift is intended to reduce dependence on China and bolster economic and security resilience.

Reshoring and Supply Chain Realignment

US policy emphasizes domestic manufacturing and supply chain security, particularly in semiconductors and advanced industries. Major incentives and trade agreements are accelerating reshoring, prompting global companies to reconsider production footprints and invest in US-based operations.

Export Diversification and Market Shift

China has offset declining US trade by expanding exports to Africa (up 26.5%), Southeast Asia (up 14%), and Latin America (up 8%). This diversification strategy reduces reliance on Western markets, strengthens ties with the Global South, and reshapes global trade flows.

Trade Diversification Imperative

Canada is aggressively pursuing trade agreements with partners like the UAE, China, and Qatar, aiming to double non-US exports by 2035. This strategy is driven by the need to mitigate risks from US protectionism and to attract foreign investment in sectors such as energy, AI, and infrastructure.

US-China Trade Tensions Escalate

The US has imposed a 25% tariff on countries trading with Iran, directly targeting China, Iran’s largest oil buyer. This move risks reigniting the US-China trade war, disrupting global supply chains, and increasing costs for multinational businesses. China’s response and supply chain rerouting are already evident, with US-China trade down 28-38% in 2025 and Southeast Asia gaining share.

Currency Depreciation and Financial Stability

The Korean won’s sharp depreciation—over 2% in early 2026—raises concerns for outbound investments and financial stability. Authorities are balancing market liberalization with intervention, as large capital outflows could exacerbate volatility, impacting international investors and trade partners.

Supply Chain Resilience Initiatives

Taiwan is diversifying production locations, notably with TSMC’s US and European expansion, and joint US-Taiwan artillery production. These efforts aim to mitigate risks from potential blockades or disruptions, ensuring continuity for global tech and defense supply chains.

Energy Infrastructure And Mineral Scarcity

US energy transition faces hardware constraints, including transformer and copper shortages, and dependence on Asian imports. Private energy islands and methane pyrolysis are emerging, but mineral security and grid bottlenecks threaten reliability and cost for global supply chains.