US-China Trade Truce and Tariffs

The recent US-China trade truce has led to reduced tariffs and eased tensions, supporting a 2.4% US growth forecast for 2026. This stabilization benefits global supply chains and trade flows, yet ongoing rivalry and policy unpredictability remain significant risks for international businesses.

Defense procurement surge and controls

Large US-approved arms packages and sustained defense demand support Israel’s defense-industrial base but heighten regulatory sensitivity. Companies in dual-use, electronics, aviation, and logistics face tighter export-control, end-use, and supply-chain traceability requirements, plus potential delays from licensing and oversight.

Supply Chain Diversification and Resilience

Vietnam remains a key beneficiary of global supply chain shifts, especially as firms diversify away from China. Its strategic location, robust manufacturing base, and integration into RCEP and CPTPP enhance resilience, but exposure to global shocks and regulatory risks persists.

Critical minerals and battery supply chains

Canada is positioning itself as a “trusted supplier” of critical minerals, supporting mining, processing and battery ecosystems. This creates opportunities in offtakes and JV processing, but permitting timelines, Indigenous consultation, and infrastructure constraints can delay projects and cashflows.

Transatlantic Trade Tensions Escalate

The UK faces heightened uncertainty as the US threatens tariffs on British goods, linked to broader disputes over Greenland and European sovereignty. These measures risk delaying the UK-US trade deal, disrupting supply chains, and increasing costs for export-driven sectors.

Ruble Volatility and Financial Policy

The ruble’s real effective exchange rate surged 28% in 2025 due to trade surpluses and high interest rates, reducing inflation but hurting export competitiveness and budget revenues. Currency volatility complicates financial planning, pricing, and investment for international businesses operating in Russia.

Logistics, Inventory, and Supply Chain Reconfiguration

US logistics networks are adapting to tariff-driven cost pressures, with firms reducing inventories, diversifying ports of entry, and reconfiguring warehousing. These changes are tightening trucking capacity and increasing supply chain velocity, impacting operational costs and strategic sourcing decisions.

Political Volatility Amid Snap Elections

Prime Minister Takaichi’s snap election on February 8, 2026, introduces short-term political uncertainty. The outcome will shape fiscal, trade, and security policy, with potential impacts on regulatory stability, economic stimulus, and Japan’s international posture, affecting investor confidence and business planning.

Political Stability and Policy Continuity Risks

The UK’s political landscape remains volatile, with ongoing debates over trade, security, and foreign policy direction. Uncertainty around future elections and leadership could impact investment strategies and long-term business planning for international investors.

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.

Foreign Direct Investment and National Security Scrutiny

Canada is welcoming FDI in strategic sectors but maintains restrictions on foreign ownership in sensitive industries. Enhanced transparency and regulatory oversight reflect a balancing act between attracting capital and safeguarding national interests, especially in technology and critical minerals.

Escalating US Tariff Policy Volatility

Recent months have seen the US intensify its use of tariffs as a strategic tool, with threats of 100% tariffs on Canadian goods and new sectoral levies. This volatility increases uncertainty for global supply chains and investment planning, impacting cross-border trade flows and business costs.

Energy Sector Liberalization and Investment

Mexico is negotiating with global oil majors like Chevron and BP to attract private capital for offshore projects, aiming to halt declining output. The evolving regulatory framework offers opportunities but also poses risks due to ongoing policy shifts and Pemex’s dominant state role.

Labor Reform and Compliance Pressures

Sweeping labor reforms—including a reduced 40-hour workweek, higher minimum wages, and stricter inspections—are reshaping Mexico’s labor market. These changes increase compliance costs and operational complexity, particularly for manufacturing, logistics, and digital platform employers, with direct implications for competitiveness and labor relations.

FDI Attraction And Industrial Ecosystems

Vietnam ranks among the world’s top 15 FDI destinations, leveraging administrative reform, ESG-compliant infrastructure, and integrated industrial parks. Enhanced support services and financial incentives are driving sustainable industrial development and long-term investor retention.

Climate Policy and Infrastructure Investment Uncertainty

US climate and infrastructure policy shifts, including reversals of clean energy initiatives, create uncertainty for global investors. Geopolitical competition over infrastructure standards and data systems is intensifying, impacting long-term planning for sustainable business operations.

Demographic Drag and Labor Market Shifts

China’s population declined by 3.39 million in 2025, with a record-low birth rate and 23% of citizens over 60. This demographic shift pressures the labor force, social security, and long-term growth, forcing businesses to adapt to a rapidly aging consumer base.

Tax audits and digital compliance

SAT is intensifying data-driven enforcement, including audits triggered from CFDI e-invoices alone, while offering a 2026 regularization program that can forgive up to 100% of fines and surcharges. Multinationals must harden vendor due diligence, invoice controls, and customs-tax consistency.

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.

Technology Import Restrictions and Evasion

Despite sanctions, Russia acquires Western technology through complex networks, often via China and third countries. This enables continued military production but increases compliance risks for global suppliers, exposing them to regulatory and reputational challenges in international markets.

Cross-Border Trade and Supply Chain Complexity

France’s integration into the European battery value chain means used batteries frequently cross borders for reuse or recycling. Regulatory divergence, logistics, and certification requirements create both risks and opportunities for international supply chain participants.

US-India trade deal recalibration

A framework for a reciprocal interim US–India agreement signals selective tariff relief tied to market-access concessions and rules-of-origin tightening. Companies should expect changing duty rates across textiles, chemicals, machinery and pharma inputs, plus increased focus on standards, NTBs, and supply-chain resilience clauses.

Regulatory and Trade Policy Uncertainty

Frequent policy shifts in trade, energy, and foreign investment—driven by geopolitical tensions and domestic priorities—create a volatile regulatory environment. Businesses face challenges in long-term planning, compliance, and risk management, particularly in sectors exposed to global supply chains and export markets.

Semiconductor and Technology Autonomy Push

Japan is investing heavily in domestic semiconductor capacity, notably through Rapidus, to achieve self-sufficiency in advanced chips. This strategic pivot aims to reduce reliance on Taiwan and China, strengthen economic security, and attract global investment in high-tech manufacturing and R&D.

Structural Economic Challenges and Reform Agenda

Thailand faces its lowest economic growth in a decade, driven by high household debt, corruption, and an aging workforce. Political parties are prioritizing SME support, anti-corruption, digital infrastructure, and EEC revitalization, but structural reforms remain critical for sustainable long-term growth.

Administrative Delays and Bureaucratic Risks

The rapid rollout of new shelter regulations has strained local planning offices, causing project approval delays. This increases operational risk for developers and international investors, with potential for missed deadlines and higher holding costs.

Foreign real estate ownership opening

New rules effective Jan. 22 allow non-Saudis to own property across most of the Kingdom via a digital platform, boosting foreign developer and investor interest. This supports regional HQ and talent attraction, while restrictions in Makkah/Madinah and licensing remain key constraints.

Logistics and Infrastructure Modernization

Mexico’s third-party logistics market is forecast to grow from $14.4 billion in 2024 to $26.8 billion by 2033, driven by nearshoring, e-commerce, and technology adoption. Investments in freight corridors, bonded warehouses, and customs efficiency are strengthening supply chain competitiveness.

Green Transition and Sustainable Investment Projects

Major projects like the $4.2 billion Giza waste-to-biofuel facility highlight Egypt’s commitment to green growth and the circular economy. Such initiatives create new investment opportunities, support job creation, and align with global sustainability standards, attracting ESG-focused investors.

Rising Regional Geopolitical Influence

Saudi Arabia is recalibrating its foreign policy, forming new defense alliances with Egypt, Turkey, and Pakistan, and asserting itself in Yemen and the Horn of Africa. This shift increases regional autonomy but also introduces new risks and uncertainties for international business operations.

Political Instability and Policy Delays

The upcoming February 2026 election and frequent government changes have delayed budget allocations, petroleum law reforms, and infrastructure spending. This uncertainty disrupts public investment, energy projects, and business operations, raising risk for international investors.

Semiconductor Supply Chain Dominance

Taiwan remains the global leader in advanced semiconductor manufacturing, with TSMC and related firms central to AI, electronics, and automotive supply chains. Recent US-Taiwan deals reinforce this role, but also expose the sector to geopolitical pressures and relocation risks.

Freight rail recovery, lingering constraints

Rail performance is improving, supporting commodities exports; Richards Bay coal exports rose ~11% in 2025 to over 57Mt as corridors stabilised. Yet derailments, security incidents, rolling-stock shortages and infrastructure limits persist, elevating logistics risk for bulk and containerised supply chains.

Defense Sector Expansion and Privatization

Israel’s defense industry is expanding internationally, with IPOs of key firms like IAI and increased exports to Europe amid heightened demand. Privatization and global partnerships enhance competitiveness, but regulatory and labor hurdles, as well as security considerations, shape the sector’s trajectory.

Robust Non-Oil Growth Bolsters Economic Outlook

Saudi Arabia’s GDP grew 4.5% in 2025, with non-oil sectors expanding 4.9%. Sustained growth in non-hydrocarbon industries is enhancing economic resilience, supporting demand for international goods and services, and diversifying the Kingdom’s role in global supply chains.