Climate shocks and heat stress

Flood reconstruction and increasingly severe heat waves reduce labour productivity, strain power systems and threaten agriculture-linked exports. Businesses face higher continuity costs, insurance constraints and site-selection trade-offs, with growing expectations for climate adaptation planning and resilient supply chains.

Weak growth, high household debt

Thailand’s growth outlook remains subdued (around 1.6–2% in 2026; ~2% projected by officials), constrained by tight credit and household debt near 86.8% of GDP (higher including informal debt). This depresses domestic demand, raises NPL risk, and limits pricing power.

Labor Reform: Forty-Hour Workweek

Mexico is phasing in a 40-hour workweek by 2030, with gradual reductions starting in 2026. The reform aims to improve productivity and worker welfare, but may increase costs for businesses, especially SMEs, and require enhanced labor inspection and compliance.

Environmental Enforcement and Permit Revocations

Indonesia has revoked permits for 28 companies, mainly in forestry, mining, and plantations, due to illegal deforestation and environmental violations. This signals stricter enforcement, affecting supply chains and compliance costs for resource-dependent industries.

ESG Standards and Regulatory Pressure

Environmental and social governance (ESG) standards are increasingly shaping investment and operational decisions, especially in mining. While Indonesia is adopting international frameworks, enforcement remains uneven, and companies face rising pressure from global buyers and lenders to improve compliance and transparency.

Customs crackdown on free zones

Customs plans tighter duty-exemption rules and higher per-item fines to curb false origin, under-valuation, and minimal-processing practices in free zones. Likely impacts include stricter ROO documentation, more inspections, longer clearance times, and higher compliance costs for importers and assemblers.

Data localization and cross-border transfers

Data security and personal information rules constrain cross-border data transfers, affecting cloud architectures, HR systems, and analytics. Multinationals may need China-specific data stacks, security assessments, and contractual controls, increasing IT spend while limiting global visibility and centralized operations.

Semiconductor tariffs and controls

A tightening blend of Section 232 chip tariffs, case-by-case export licensing, and enforcement actions (e.g., a $252m Applied Materials settlement) is reshaping cross-border tech trade, raising compliance costs, and accelerating supply-chain diversification away from China.

Automotive transition and investment flight

VDA reports 72% of 124 suppliers are delaying, cutting or relocating German investment; employment fell from 833k (2019) to 726k (2025). EV incentives may depress used values and dealer margins, while CO₂-rule uncertainty complicates capex and sourcing decisions.

Auto sector retooling amid trade

Canada’s auto industry is heavily integrated with the U.S.; trade renegotiation and tariff exposure are delaying parts of roughly C$46B in announced investment and complicating EV transition plans. Plant idlings, retooling, and rules-of-origin shifts raise operational and sourcing risk.

Long-term LNG contracting shift

Japan is locking in multi-decade LNG supply to secure power for data centres and industry. QatarEnergy’s 27-year deal with Jera covers ~3 Mtpa from 2028, improving resilience but adding destination-clause rigidity and exposure to gas-demand uncertainty from nuclear restarts.

China Relations and Supply Chain Diversification

Although overshadowed by US tensions, South Korea’s trade and supply chain strategies remain sensitive to China’s economic policies and regional dynamics. Ongoing diversification efforts are crucial for risk mitigation, especially in electronics, automotive, and critical materials sourcing.

Macroeconomic slowdown, FX sensitivity

The NBU cut the key rate to 15% while warning war damage reduces GDP growth to about 1.8% and pressures the balance of payments. Elevated uncertainty affects pricing, payment terms, working-capital needs, and currency hedging for importers and exporters.

Fiskalpolitik und Verfassungsklagen

Schuldenfinanzierte Sondervermögen treiben einen Großteil des Wachstums, zugleich drohen Rechtsrisiken: Die Grünen prüfen Verfassungsbeschwerden gegen Haushalt und Mittelverwendung. Unternehmen müssen mit Verzögerungen bei Infrastruktur- und Klimaprojekten, Förderunsicherheit sowie wechselnden Steuer- und Ausgabenprioritäten rechnen.

Logistics capacity and freight cost volatility

Freight market tightness, trucking constraints, and episodic port/rail disruptions keep U.S. logistics costs volatile. Importers should diversify gateways, lock capacity via contracts, increase safety stocks for critical SKUs, and upgrade visibility tools to manage service-level risk.

Security and Organized Crime Risks

Persistent insecurity, including theft and extortion, remains a top obstacle for business operations. Nearly half of Mexican firms report crime victimization, leading to higher security costs and operational risks, particularly in key industrial regions outside secure zones like Coahuila.

Escalating secondary sanctions pressure

The US is tightening “maximum pressure” through new designations on Iran’s oil/petrochemical networks and vessels, plus threats of blanket tariffs on countries trading with Tehran. This raises compliance, banking, and counterparty risks for global firms and intermediaries.

Aggressive US Industrial and Tariff Policy

Sweeping tariffs, export controls, and industrial subsidies under the Trump administration aim to boost domestic manufacturing and reduce trade deficits. These measures raise input costs, provoke foreign retaliation, and complicate cross-border investment and supply chain management for global firms.

Local content procurement intensifies

Local-content policies are deepening: PIF-linked spending reached SAR591bn ($157bn) in 2020–24, and government procurement increasingly scores local value-add. Foreign firms face higher compliance costs, partner-selection risk, and incentives to localize manufacturing, services, and workforce.

USMCA review and tariff risk

Washington and Mexico have begun talks on USMCA reforms ahead of the July 1 joint review, with stricter rules of origin, anti-dumping measures and critical-minerals cooperation. Uncertainty raises pricing, compliance and investment risk for export manufacturers, especially autos and electronics.

Domestic semiconductor substitution drive

Accelerating localization in semiconductor equipment and materials, alongside constraints on advanced foreign tools, is reshaping vendor ecosystems. Multinationals face procurement displacement, IP exposure, and evolving partnership terms, while China-based fabs prioritize domestic suppliers and capacity.

Internet shutdowns and digital controls

Near-total internet blackouts and tighter censorship have cut businesses off from customers, suppliers, and payments, with reported losses from millions to tens of millions of dollars per day. Expect unreliable connectivity, mandatory use of domestic platforms, and elevated cybersecurity exposure.

Geopolitical Risks and Trade Diversification

Turkey faces challenges from shifting global alliances, new EU and India FTAs, and regional tensions. Trade with India declined by over 14% in 2024–25, and exclusion from new FTAs limits market access, highlighting the need for diversified export strategies.

USMCA review and North America

The approaching USMCA review is heightening risk for automotive, agriculture, and manufacturing flows across the US–Canada–Mexico corridor. Threatened tariffs and rules-of-origin pressures incentivize nearshoring but complicate cross-border planning, inventory placement, and long-term supplier commitments.

Infrastructure Expansion and Logistics Modernization

India’s 2026-27 budget prioritizes accelerated investment in highways, ports, and digital infrastructure. Initiatives like Gati Shakti have reduced logistics costs below 10% of GDP, improving supply chain efficiency and global competitiveness, and supporting the goal of becoming a $5 trillion economy.

Korea semiconductor industrial policy reboot

A new Special Act creates a presidential commission, dedicated funding and cluster support to strengthen the entire chip supply chain. Regulatory streamlining and regional incentives can attract foreign suppliers, but unresolved labor flexibility debates may constrain rapid R&D and ramp-ups.

Rules-Based Order Fragments Globally

Canadian leadership now openly acknowledges the collapse of the traditional rules-based international order. This fragmentation increases uncertainty for multinational firms, as trade, finance, and supply chains become tools of geopolitical leverage rather than predictable frameworks.

Energy tariffs and circular-debt risk

Power pricing, gas availability, and circular-debt reforms directly affect industrial competitiveness. Recent tariff cuts for industry may support exports, but ongoing sector restructuring implies continued volatility in energy costs, outages, and subsidy policy—key variables for manufacturing site selection and contracts.

Semiconductor geopolitics and reshoring

TSMC’s expanded US investment deepens supply-chain bifurcation as Washington tightens technology controls and seeks onshore capacity. Companies must manage dual compliance regimes, IP protection, export licensing, and supplier localization decisions across US, Taiwan, and China markets.

Port congestion and export delays

Transnet port underperformance—especially Cape Town—continues disrupting time-sensitive exports; fruit backlogs reportedly reached about R1bn, driven by wind stoppages, ageing cranes and staffing issues. Diversions to other ports add cost, extend lead times and raise spoilage risk.

UK-EU Relations and Trade Frictions

Despite the Trade and Cooperation Agreement, UK-EU trade faces ongoing frictions, including customs checks, sectoral disputes, and unresolved issues in energy and services. These tensions add complexity and costs to cross-border operations.

EU Energy Decoupling and Bans

The EU has legislated a full ban on Russian LNG and pipeline gas imports by 2027, with plans to phase out Russian oil as well. This structural decoupling will reshape European energy markets, accelerate diversification, and impact global energy flows, with significant implications for Russian revenues and EU supply chains.

Severe Disruption of Export Logistics

Russian attacks on port infrastructure have reduced Ukraine’s export earnings by about $1 billion in Q1 2026. Grain and metals exports have been rerouted via rail, but overall volumes are down 47% year-on-year, creating significant supply chain and revenue challenges for exporters and partners.

Tighter sanctions enforcement playbook

Expanded U.S. sanctions targeting Iranian officials and digital-asset channels signal heightened enforcement, including against evasion networks. Firms in finance, shipping, commodities, and tech face greater due-diligence burdens, heightened penalties risk, and potential disruptions to cross-border payments and insurance.

Tariff Volatility and Litigation Risk

On‑again, off‑again tariff actions and court challenges are driving demand swings and front‑loading. Forecasts show US container imports down 2% YoY in H1 2026, with March -12% and April -7.1%, complicating pricing, contracts, and inventory planning.

Shifting Trade Partnerships and Diversification

US unpredictability has prompted partners like India, the EU, and others to seek alternative trade relationships, including new deals with China. This diversification reduces US leverage, alters global trade flows, and impacts long-term market positioning for multinationals.