Steel Protectionism Reshapes Supply Chains

The UK will cut steel import quotas by 60% and impose 50% tariffs above caps from July, while the EU also tightens quotas. Manufacturers warn of shortages, higher input costs and disruption across automotive, construction and engineering supply chains.

Energy Import Shock Exposure

Pakistan sources up to 90% of its oil from the Gulf, leaving it highly vulnerable to Middle East disruption. Fuel prices have surged, inflation is rising, and imported energy costs threaten manufacturers, freight operators, and trade-intensive sectors through higher input and transport expenses.

Energy Shock Hits Industry

Middle East conflict has sharply lifted Vietnam’s fuel, freight, and transport costs, pushing March manufacturing PMI down to 51.2 and inflation to 4.65%. Higher energy dependence threatens margins, delivery reliability, and production planning across export manufacturing, logistics, and aviation.

EV Incentives Enter Transition

Thailand remains committed to electric-vehicle development, but companies are seeking clarity as the EV 3.0 incentive programme has ended and EV 3.5 runs to 2027. Uncertainty over subsidies, electricity costs, and technology choices affects automotive investment and supplier planning.

China Plus One Acceleration

Persistent geopolitical friction and supply-chain concentration risk are accelerating manufacturing diversification toward Vietnam, Mexico, Taiwan, and ASEAN. China remains central to industrial ecosystems, but companies are increasingly adopting dual-sourcing, regional redundancy, and selective decoupling strategies to reduce exposure to tariff, sanctions, and disruption risks.

US Tariffs on Exporters

New US tariff measures are offsetting the usual benefits of a weak yen for Japanese exporters, especially autos, steel and industrial goods. Analysts estimate profits are already under pressure, with investment, hiring and North America supply-chain localization decisions becoming more urgent.

Macroeconomic Softness and Peso Volatility

Mexico’s economy grew only 0.6% in 2025, while inflation remains above target and Banxico has cut rates to 6.75%. This mix supports financing but increases peso sensitivity to trade negotiations, complicating pricing, hedging, imported input costs and medium-term investment planning.

Budget Law and Tax Friction

Implementation of the 2026 budget has been delayed after parliament referred amendments to the Council of State. Contested provisions include higher fuel and gas excise duties and capped indexation, creating near-term uncertainty for labour costs, consumer demand, and operating expenses.

Auto and EV investment realignment

Canada’s auto sector is being reshaped by U.S. tariffs and possible Chinese investment. Early talks for Stellantis and Leapmotor to use the Brampton plant highlight opportunities for capital inflows, but also risks around U.S. market access, local-content rules, and supplier displacement.

Tax, Budget, and Regulatory Reset

Ahead of the FY2026-27 budget, Pakistan is weighing a tax target above Rs15.2 trillion, possible super-tax changes, and exporter relief measures. For foreign firms, evolving tax policy, refund delays, and compliance shifts remain central to pricing, cash flow, and market-entry planning.

IMF-Driven Fiscal Tightening

Pakistan’s IMF programme remains the core policy anchor, with budget talks centered on a Rs15.2-15.6 trillion tax target and possible additional IMF funding. Businesses face tighter taxation, subsidy restraint, and slower public spending, shaping demand, pricing, and compliance costs across sectors.

Domestic Gas Intervention Risk

Canberra may curb LNG exports to protect east-coast supply after the ACCC projected Q3 demand of 499 petajoules against 488 petajoules of supply. Potential export controls, reservation measures and pricing distortions create uncertainty for energy-intensive industry and gas-linked exporters.

Customs Reform Raises Compliance Costs

New customs rules and digital documentation requirements are increasing burdens on importers and brokers. Traders report port saturation, system failures and heavier paperwork, while U.S. officials argue stricter liability, higher sanctions and excessive transaction data demands may hinder trade facilitation and raise clearance risks.

Inflation, Fuel and Fiscal Stress

War-related energy and transport shocks are feeding inflation and budget pressure. Gasoline prices rose 14.7% to 8.05 shekels per liter, the policy rate stayed at 4%, and higher defense spending is complicating deficit management, tax expectations and medium-term sovereign risk assessments.

Energy Transition Investment Pipeline

Renewable investment is expanding and improving medium-term power resilience. Mulilo’s 337MW Middlepunt solar project reached financial close, with expected generation of 770 GWh annually under a 20-year agreement, reinforcing grid reform and opportunities in clean energy, storage and industrial power procurement.

China Trade Stabilisation with Limits

Relations with China have stabilised, supporting trade recovery and possible expansion under a reviewed bilateral FTA, but dependence remains high in minerals and energy. Businesses still face strategic exposure from policy frictions, concentration risk and China’s dominant midstream processing ecosystem.

Earthquake Recovery Affects Infrastructure

A magnitude 7.3 earthquake near Luganville damaged buildings and disrupted services, while Port Vila’s CBD rebuild and geotechnical works continue. For cruise operators and investors, seismic exposure heightens due diligence needs around port readiness, urban services, business continuity, and reconstruction timelines.

Chabahar Corridor Faces Uncertainty

Chabahar remains strategically important for India, Central Asia access, and supply-chain diversification beyond Pakistan, but its sanctions waiver expires this month. Uncertainty over operating rights, financing, and legal protections complicates logistics planning, infrastructure investment, and long-term corridor development for international users.

Fiscal Strain and Ratings

France’s fiscal position remains a leading business risk: Moody’s kept Aa3 but with negative outlook, while the 2025 deficit was 5.1% of GDP and 2026 is targeted at 5.0%. High debt, weaker growth and possible tax increases could raise financing costs.

EU Funding and Reform Bottlenecks

Ukraine’s macro stability still depends on external financing, with a €90 billion EU loan and IMF disbursements tied to delayed reforms. Missed legislative deadlines, tax changes, and customs appointments create liquidity risk, policy uncertainty, and slower reconstruction financing for investors.

Petrochemical Input Vulnerability

South Korea imports about 45% of its naphtha, historically 77% from the Middle East, exposing chemicals and chip supply chains to acute feedstock risk. Emergency export bans, plant shutdowns, force majeure notices and temporary Russian sourcing underscore fragility for manufacturers and investors.

Regional Trade Frictions Inside SACU

Import restrictions by Namibia, Botswana and Mozambique on South African produce are disrupting regional food supply chains and undermining SACU and AfCFTA commitments. With 17% of South Africa’s $15.1 billion agricultural exports going to SACU in 2025, policy unpredictability is rising.

Fuel Shock Raises Logistics Costs

Diesel prices surged 13.9% in March and gasoline rose about 4.5%, reflecting global oil disruption. For freight-dependent sectors such as agribusiness, retail and manufacturing, higher transport costs threaten margins, inventory planning and domestic distribution efficiency across Brazil’s vast geography.

Energy Security and Import Exposure

Japan remains highly vulnerable to imported fuel disruptions despite reserve releases and route diversification. LNG still supplies over 30% of power generation, while oil import dependence on the Middle East keeps manufacturers exposed to logistics shocks, electricity costs, and inflation.

Local Fiscal Stimulus Dependence

China’s Q1 2026 local bond issuance reached 3.1059 trillion yuan, up 9.3% year on year, with over 1 trillion yuan in new special bonds. Growth remains reliant on debt-backed infrastructure and industrial projects, supporting suppliers short term but worsening balance-sheet vulnerabilities.

Supply Chain Diversification Push

Seoul is accelerating supply diversification through strategic oil swaps, new sourcing from 17 countries and diplomatic outreach to Kazakhstan, Oman and Saudi Arabia. These measures improve resilience but imply higher procurement costs, longer transit times and new supplier-management requirements for businesses.

Immigration Constraints on Talent

Tighter legal immigration rules, including a $100,000 H-1B application fee, are reducing high-skilled talent inflows. Multinationals may face higher labor costs, slower hiring, and relocation of talent pipelines toward Canada, Australia, and other markets with more predictable visa regimes.

Non-Oil Export Expansion Accelerates

Saudi non-oil exports reached a record SR624 billion in 2025, up 15%, with their share of total exports rising to 44%. Growth in services, re-exports, machinery, fertilizers, and food signals broader manufacturing and trade diversification opportunities beyond hydrocarbons.

Foreign Investment Screening Expands

US policy increasingly treats economic security as national security, sustaining stricter scrutiny of foreign acquisitions, sensitive technology access, and supply-chain exposure. Investors should expect longer approvals, more mitigation requirements, and greater political risk in semiconductors, critical minerals, infrastructure, data, and advanced manufacturing.

Weak Demand, Policy Stimulus

Soft domestic demand, weak wage growth, and low consumer confidence are prompting targeted fiscal support for consumption, services, and private investment. While stimulus may stabilize activity, subdued household spending and slower growth still weigh on sales outlooks, pricing power, and investment returns.

Steel Sector Under US Tariffs

Mexico’s steel industry has fallen to a 25-year low under intensified U.S. Section 232 tariffs. Capacity utilization dropped to 55%, exports fell 53% in 2025 and domestic consumption declined 10.1%, threatening upstream suppliers, industrial investment and manufacturing competitiveness.

Digital and Regulatory Bottlenecks

OECD warnings highlight Germany’s fragmented regulations, slow public-service digitalisation, high labour taxes and burdensome market-entry rules. Weak administrative capacity and delayed approvals continue to hinder construction, technology deployment and business formation, raising time-to-market and compliance costs for foreign investors.

Labor shortages and cost pressures

An ageing workforce and structurally tighter labor supply are raising business costs and limiting Germany’s recovery capacity. Industry groups are pressing for lower non-wage labor costs, higher participation by older workers and women, and more labor-market flexibility to sustain investment and operations.

Weak Construction Equipment Cycle

Finland’s housing and construction downturn is weighing on domestic demand for earthmoving and building machinery. March housing transactions fell over 14% year on year, new-home sales more than halved, and activity remained over 25% below the five-year average, constraining fleet investment.

Security Threats Disrupt Logistics

Cargo theft, extortion and violence remain direct operational risks for supply chains. Recent trucker protests and blockades disrupted corridors across 13 to 20 states, while officials recorded 6,263 cargo robbery investigations in 2025 and industry estimates exceed 16,000 incidents annually.

FDI Shifts Toward High-Tech

Vietnam attracted US$15.2 billion in registered FDI in Q1, up 42.9% year on year, with US$5.41 billion disbursed. Capital is concentrating in electronics, semiconductors, AI data centers, energy, and green manufacturing, reinforcing Vietnam’s role in higher-value regional supply chains.