Shekel volatility and policy response

The shekel recently reached a 33-year high before partially reversing, reflecting shifting war sentiment and capital flows. Currency swings affect exporter margins, import prices, hedging costs, and investment returns, while the Bank of Israel’s 3.75% rate stance and market intervention shape financing conditions.

Customs Enforcement Becomes Stricter

A new enforcement push targets tariff evasion, transshipment, undervaluation, and forced-labor imports, with tighter importer-of-record rules, higher bond requirements, and broader supply-chain disclosures. Companies shipping into the U.S. face greater audit exposure, documentation demands, and potential border delays or penalties.

Nuclear power as strategic advantage

France’s low-carbon nuclear electricity is becoming a core investment attraction, especially for data centers and advanced industry. For manufacturers and investors, this supports energy security and decarbonization goals, but may also create allocation tensions if power-intensive projects multiply rapidly.

Shadow Fleet Distorts Maritime Trade

Russia relies heavily on aging, opaque tankers using false flags, AIS manipulation and ship-to-ship transfers to move oil. Tighter inspections in Baltic and European waters raise accident, detention and delay risks for regional shipping, ports, insurers and commodity traders.

Competitive Tariff Access Race

New Delhi is seeking preferential US tariff treatment over rivals including Vietnam, Bangladesh, Sri Lanka, Pakistan, Malaysia, and Indonesia. Even small duty differentials could redirect orders, factory siting, and supplier selection in textiles, engineering goods, leather, chemicals, and light manufacturing.

China Trade Decoupling Persists

The United States is preserving structurally higher tariffs on Chinese goods while allowing only limited relief for roughly $30 billion of non-strategic products. Businesses should expect continued managed trade, elevated geopolitical friction, and pressure to diversify technology and component sourcing away from China.

Political Reform Uncertainty Persists

Constitutional reform debates and intensifying rivalry between major political blocs are prolonging uncertainty over Thailand’s governance trajectory. For investors, this raises concerns over policy continuity, regulatory predictability, and the risk that institutional conflict could delay economic reforms and strategic projects.

Forced-Labor Compliance Becomes Strategic

Proposed US tariffs tied to foreign forced-labor enforcement make labor-rights due diligence a direct trade issue rather than a reputational one. Importers must strengthen traceability, supplier verification, and exposure mapping, especially where inputs may involve China-linked or other high-risk production networks.

China dependency reshapes trade

Russia’s economic pivot has made China its dominant commercial lifeline, with bilateral trade reaching about $228 billion in 2025. Russia exported roughly $126 billion of raw materials and imported about $102 billion of goods, increasing exposure to Chinese pricing, finance and logistics leverage.

US Tariff and Trade Risk

Washington’s proposed additional 12.5% tariff on South Korean goods, alongside separate excess-capacity probes, threatens margin compression and planning uncertainty. Seoul argues total tariff burdens should stay within existing bilateral understandings, but exporters still face higher compliance, pricing, and market-access risk.

Industrial Shielding Against China

France is pushing faster EU trade defenses and ‘European preference’ measures against Chinese competition, especially in EVs, steel, chemicals and pharmaceuticals. This supports local manufacturing and selective investment, but also raises sourcing complexity, compliance burdens and possible retaliatory trade friction.

Investment Climate Improving Selectively

Cairo is advancing reforms to restore investor confidence, especially in strategic sectors. The government says overdue payments to foreign oil and gas partners fell from $6.1 billion in June 2024 to zero, a notable signal for contract credibility, project execution, and upstream investment.

Won Volatility and Capital Outflows

The won has fallen to its weakest level since 2009, while foreign investors reportedly withdrew about $70 billion from Korean equities in first-half 2026. Currency volatility raises hedging costs, complicates import pricing, and can delay investment decisions despite strong external balances.

US Tariffs and Diplomatic Friction

Washington’s 30% tariffs on South African goods, combined with political tensions and G20 disruption, raise market-access risk for exporters. Firms with US exposure face margin pressure, trade diversion, compliance uncertainty, and a stronger case for diversifying destinations and supply chains.

State-led infrastructure spending offset

Public spending on infrastructure and defense is stabilizing investment after years of decline, with forecasts of 0.7% growth in fixed investment in 2026. This offers opportunities in construction, logistics, engineering and public procurement, though fiscal deficits and execution bottlenecks remain significant constraints.

USMCA review prolongs uncertainty

Washington is signaling no immediate USMCA renewal, likely triggering annual reviews beyond July 1. With nearly US$1.6-2.0 trillion in regional trade at stake, prolonged negotiation risk could delay investment decisions, complicate pricing, and raise compliance uncertainty for cross-border operations.

EU Investment Reorientation Toward India

The planned EU-India trade agreement is already prompting expansion plans from European firms, with 96% of surveyed German companies expecting positive effects and about half planning concrete moves, reinforcing India’s role as a manufacturing, export, and diversification base.

Russia Sanctions and Secondary Tariff Risk

Congress and the administration are developing tougher Russia measures, including possible 500% tariffs tied to Russian imports or countries purchasing Russian commodities. Even if not fully enacted, the proposal heightens sanctions risk for energy traders, shippers, insurers, and globally exposed compliance teams.

Security Costs Burden Operations

Organized crime, extortion, and cargo security remain major operational burdens despite signs of improved enforcement. Official extortion complaints rose from 8,734 in 2019 to 10,227 in 2024, while many firms still devote 2-10% of annual budgets to security, raising logistics and compliance costs.

Monetary easing and inflation outlook

Israel’s policy rate has been cut to 3.75%, with officials signaling faster easing if inflation continues to moderate. Lower borrowing costs could support domestic demand and financing conditions, but war-related supply constraints still create uncertainty for pricing, procurement, and capital expenditure planning.

Forced-Labor Rules Globalize Compliance

The proposed U.S. tariffs tied to foreign forced-labor enforcement would extend trade pressure well beyond direct import bans, affecting suppliers across Asia, Europe, and the Americas. Multinationals need deeper traceability, third-country sourcing reviews, and stronger human-rights due diligence to preserve U.S. market access.

Hormuz Maritime Chokepoint Disruption

Iran’s control contest over the Strait of Hormuz remains the single biggest trade risk, with traffic still below pre-war norms of about 140 vessels daily. Unclear reopening terms, demining delays and informal transit arrangements raise freight, insurance and delivery costs.

Supply Chain Costs from Shipping Risks

Strait of Hormuz-related shipping and fuel volatility is feeding into Thailand’s freight, airline, and import costs. Businesses face higher transport expenses, longer routing risk, and greater inventory-planning uncertainty, particularly in energy-intensive manufacturing, aviation-linked trade, and time-sensitive supply chains.

Ceasefire diplomacy and reconstruction uncertainty

Mediated proposals on Hamas disarmament, phased Israeli withdrawal, and Gaza governance remain unresolved, delaying clarity on reconstruction, border arrangements, and aid access. For businesses, prolonged diplomatic uncertainty limits visibility on infrastructure rebuilding, donor flows, and future operating conditions near Gaza.

Hardening EU-China Trade Defenses

France is pushing faster EU safeguards, tariffs, and ‘European preference’ measures against Chinese competition in EVs, steel, chemicals, and pharmaceuticals. This may support local industry but increase regulatory intervention, retaliation risk, sourcing shifts, and compliance complexity for multinationals.

Fiscal Outlook Improves, Municipal Risk Persists

South Africa posted a third consecutive primary budget surplus, reaching 1.1% of GDP, and debt is expected to decline over time. However, major municipalities, especially Johannesburg, face severe financial distress, tariff hikes and infrastructure underinvestment, creating localized operational and payment-risk concerns.

Regional conflict and security escalation

Renewed Israel-Iran exchanges, continuing Gaza instability, and persistent missile threats are driving operational uncertainty, insurance costs, contingency planning, and investor risk premiums. Regional airspace disruptions and shelter directives also raise business continuity concerns for multinationals and visiting executives.

Fiscal Strain and Budget Uncertainty

France’s 2027 budget faces acute uncertainty amid minority government constraints, with deficit risks rising from a 5% target to 6–7% of GDP if delayed. Debt could exceed 120% of GDP by 2028, increasing tax, subsidy and spending-cut risks for businesses.

EU Trade Integration Frictions

Turkey remains strategically important to Europe’s supply chains, yet EU accession talks stay frozen and political tensions persist. The European Parliament backed a critical report and highlighted low foreign-policy alignment, creating uncertainty around Customs Union modernization, market access conditions and regulatory predictability.

US Tariff Uncertainty Persists

Washington’s planned Section 301 tariffs of up to 12.5% on Japanese goods have not yet taken effect, but they prolong uncertainty despite a 15% bilateral cap. Exporters, automakers, and investors still face compliance, pricing, and market-access planning risks.

Shadow Fleet Shipping Risks

Russia’s oil trade increasingly depends on a shadow fleet already exceeding 630 sanctioned vessels, with the UK sanctioning more than 600. New measures now target bunkering, insurers, ports and refineries, increasing freight costs, operational opacity and maritime disruption risks.

Security-first regulatory tightening

Beijing is expanding controls over outbound investment, technology transfers, data flows, and overseas staffing from July 1. This security-driven approach raises compliance burdens for multinationals, complicates cross-border R&D and treasury operations, and increases legal exposure for firms handling sensitive information.

Nuclear Cooperation and Shipbuilding

Seoul and Washington have opened accelerated talks on uranium enrichment, spent-fuel reprocessing, nuclear-powered submarines, and shipbuilding cooperation. The negotiations could reshape energy security, naval-industrial capacity, and high-value manufacturing, but also hinge on nonproliferation constraints and bilateral political trust.

Rare Earth Leverage Intensifies

Beijing’s tighter rare-earth and critical mineral controls are exposing global dependence on China’s dominant processing position, around 70% on average across key energy-transition minerals. Supply disruptions to Japan, Europe and US manufacturers raise procurement, inventory and localization pressures.

Port and Corridor Capacity Constraints

Trade diversification depends on transport expansion, especially around Vancouver, where the port handles $1 billion in trade daily with 170 countries. Rail, road and airport bottlenecks in the Lower Mainland now represent a direct constraint on export reliability and supply-chain resilience.

PIF Strategy Shifts Capital Domestic

The Public Investment Fund is redirecting roughly 80% of its portfolio toward domestic projects and reducing overseas exposure from 30% to 20%. For foreign firms, this increases opportunities in local partnerships, procurement, capital markets, and Saudi-based project execution.