Resilient logistics rerouting capacity

Saudi Arabia’s East-West pipeline, with 7 million barrels per day capacity, and Red Sea ports have softened external shocks. For international firms, this improves continuity versus peers, but also concentrates exposure around western export corridors and related infrastructure.

USMCA Review and North American Rules

The United States and Mexico have begun USMCA review talks focused on automotive rules of origin, steel, aluminum, economic security, and regulatory compatibility. Potential revisions could reshape regional content strategies, supplier qualification, and factory investment decisions across North American manufacturing networks.

Defence Industry Gains Momentum

Ukraine is channeling substantial new financing into domestic defence production, with €28.3 billion planned in 2026 alone for weapons and industrial capacity. This supports joint ventures and local manufacturing, while deepening regulatory, sourcing and security due-diligence requirements for foreign partners.

China Dependence Deepens Further

China remains Brazil’s largest trade partner, with bilateral trade reaching US$170.9 billion in 2025. New sanitary approvals should expand beef and pork exports, but heavier dependence on Chinese demand, pricing and fertilizer supply heightens concentration risk for exporters and investors.

Immigration slowdown constraining labor

Tighter immigration is slowing U.S. labor-force growth, with estimates suggesting 4.6 million fewer working-age people by 2033 under reduced inflows. Labor-intensive sectors may face tighter hiring conditions, wage pressure, and weaker long-run productivity, affecting site selection and operating-cost assumptions.

Managed US-China Trade Friction

Beijing and Washington are institutionalising a managed-trade approach rather than resolving structural disputes. A new bilateral trade board may ease tariffs on roughly $30 billion of non-strategic goods, but higher baseline US tariffs, export controls and policy unpredictability will keep sourcing, pricing and market-access risks elevated.

Oil Price And Hormuz Exposure

Pakistan remains highly exposed to Gulf energy and shipping disruptions. Strait of Hormuz instability has already raised LNG and oil-related costs, lifted inflation back upward and increased import bills. Energy-intensive sectors, freight operators and importers face greater hedging and procurement risk.

Trade Diplomacy And Hedging

Indonesia is using active diplomacy to attract investment, secure technology transfer, and balance relations among major powers. This creates openings across manufacturing, energy, and defense-linked sectors, but also means commercial conditions can be shaped by strategic bargaining and evolving geopolitical alignments.

US Tariff Bargaining Exposure

Seoul’s trade outlook remains heavily shaped by Washington’s tariff diplomacy. South Korea pledged US$350 billion of US investment for lower tariff rates, yet implementation disputes and renewed US complaints create uncertainty for exporters, capital allocation, and bilateral market access planning.

Power and Water Constraints

Rapid expansion in AI, data centers and chipmaking is intensifying Taiwan’s infrastructure challenge. Officials say electricity supply is adequate through 2032, yet industry leaders still cite water and power risks, making utilities resilience and site selection critical for incoming investment.

USMCA review uncertainty escalates

Washington’s refusal to pre-renew USMCA before the 1 July milestone points to rolling annual reviews through 2036, extending uncertainty over roughly US$2 trillion in North American trade and delaying capital allocation, supplier commitments, and long-horizon manufacturing investments in Mexico.

Semiconductor Export Control Tightening

Taiwan’s first public prosecution over Nvidia AI chip smuggling to China, including forged export documents and seized servers, signals stricter enforcement. Companies in advanced electronics now face higher compliance, screening, traceability, and third-country transshipment risk across regional supply chains.

US Trade Probe Escalation

Washington has opened a third Section 301 investigation into Vietnam, this time on intellectual property, alongside probes on overcapacity and forced labor. With unresolved trade talks and tariff risk, exporters, sourcing strategies, compliance planning, and margin assumptions face growing uncertainty.

EV And Advanced Industry Push

Thailand is reinforcing its role as Southeast Asia’s largest EV manufacturing base while courting investment in battery materials, aviation engineering, and AI-linked infrastructure. This supports long-term industrial upgrading, but requires firms to assess incentives, supplier localization, and technology-partnership opportunities carefully.

Trade Diversification Beyond United States

In response to U.S. trade risk, Canada is pursuing agreements with India, ASEAN, Mercosur, Thailand and the Philippines, targeting over $300 billion in new non-U.S. exports this decade. This creates openings in logistics, energy and advanced manufacturing, while requiring firms to adapt market-entry strategies.

Energy Shock Raises Operating Costs

Conflict-linked oil volatility has exposed Thailand’s import dependence, with more than half of recent retail fuel-price increases attributed to Strait of Hormuz risk. Higher fuel and electricity costs are pressuring transport, manufacturing, aviation and tourism margins, while prolonged subsidies would strain public finances.

EU Funding Tied Reforms

Ukraine’s €90 billion EU package and Ukraine Facility disbursements are increasingly conditional on tax, customs, rule-of-law, and anti-corruption reforms. This improves long-term governance prospects, but creates near-term policy volatility for investors, importers, digital platforms, and small-business structures.

Oil Windfall, Growth Volatility

Higher crude prices lifted Saudi oil export revenue to $24.7 billion in the first full conflict month, while Aramco’s Q1 net profit rose 25.5% to SAR120.13 billion. Yet volatility complicates budgeting, procurement, energy-intensive operations, and inflation management.

Semiconductor Controls Tighten Further

US chip export restrictions on China are expanding through tougher enforcement and anti-smuggling measures, while Chinese retaliation increasingly targets US semiconductor firms. The result is higher compliance risk, disrupted AI hardware flows, and accelerated technology bifurcation across global supply chains.

Investment Climate and FDI Shift

Germany’s attractiveness for investors is weakening, with announced foreign direct investment projects falling for an eighth straight year to the lowest level since 2009. At the same time, Chinese firms became the largest single-country source of projects, sharpening screening, partnership, and dependency questions.

Automotive Margins Under Pressure

Japan’s carmakers absorbed roughly $28 billion in tariff exposure, EV write-downs, and restructuring costs. Honda posted a ¥423.9 billion loss, while suppliers face rising material costs, increasing pressure to localize production, prioritize hybrids, and redesign supply chains.

Logistics Bottlenecks Constrain Competitiveness

Vietnam’s trade growth continues to outpace logistics efficiency, with container import dwell times reported at roughly three times Singapore’s level. Port connectivity, multimodal transport, customs modernization, and National Single Window upgrades remain critical for lowering supply-chain cost and delay risks.

Oil Shock Raises Input Costs

Global oil disruption linked to the Iran conflict is pressuring South Africa’s fuel-intensive economy. The country imports all crude oil and about 81% of petrol, diesel and paraffin consumption, exposing transport, agriculture and industrial operators to higher prices, stock insecurity and logistics vulnerabilities.

Foreign Investment Governance Reforms

Japan’s corporate governance story remains attractive, but proposed changes to shareholder proposal thresholds could alter investor influence dynamics. For foreign funds and strategic investors, governance reform still supports capital allocation, though activism channels may narrow and engagement strategies may need adjustment.

Regional conflict and maritime disruption

Conflict linked to Iran and threats to Hormuz and Bab el-Mandeb are disrupting shipping, raising insurance and freight costs, and increasing delivery risk. Saudi firms benefit from bypass routes, but broader trade, aviation, and investor sentiment remain vulnerable.

War economy slowdown deepens

Russia’s growth outlook has been cut sharply, with the government lowering 2026 GDP growth to 0.4% and inflation expectations to 5.6%. Slower activity, weak investment and persistent war spending are undermining domestic demand, planning visibility and commercial returns.

Infrastructure Buildout Reshapes Logistics

The government is accelerating expressways, port links, urban rail, airports, and industrial zones to support double-digit growth ambitions. Better connectivity should reduce logistics friction over time, but construction bottlenecks, financing constraints, and uneven local execution still affect site selection and delivery timelines.

China-Centric Trade Dependence

Iran’s external trade resilience is increasingly concentrated in China, which reportedly absorbs around 90% of Iranian oil exports. This dependence narrows Tehran’s commercial options and heightens third-country sanctions, reputational and payment-settlement risks for firms exposed through Chinese intermediaries.

US-China Tariff Managed Trade

Washington is preserving elevated tariffs on Chinese goods while exploring selective cuts on roughly $30 billion of non-strategic products. This managed-trade approach sustains pricing volatility, customs complexity, and sourcing uncertainty for manufacturers, importers, agribusiness, aviation, and consumer-goods companies.

Development Spending Compression

Budget pressures are shifting resources toward defence and debt management, with federal development spending set at about Rs1 trillion while defence rises 18% to Rs3 trillion. Reduced public investment may slow infrastructure upgrades, supplier demand and medium-term productivity gains across key sectors.

Persistent Inflation, Tight Monetary Policy

Turkey’s central bank held its policy rate at 37%, with overnight lending at 40%, while May inflation remained 32.61%. Elevated borrowing costs, lira volatility near 46 per dollar, and revised 2026 inflation targets raise financing, pricing, and hedging risks for importers and investors.

Customs Enforcement Burden Increases

A new enforcement push targets transshipment, undervaluation, forced-labor imports, and importer-of-record practices, with tighter bond, disclosure, and beneficial-ownership requirements. Companies shipping into the United States face higher audit risk, stricter documentation demands, and potential market-access disruption for compliance failures.

Geopolitical Shipping and Energy Disruptions

Middle East conflict is already affecting South Korean trade through higher crude prices, shipping disruption, and weaker exports to the region, which fell 7.7% in May. Importers and manufacturers face freight, insurance, and input-cost volatility across supply chains.

Policy Intervention in Cost Pressures

Rising energy and fuel costs are prompting targeted government intervention, including support for low-income households, mileage relief and potential anti-profiteering action. Businesses should expect a more activist policy environment affecting pricing, regulation, transport costs and consumer demand conditions.

Judicial reform chills investment

The OECD says judicial reform, autonomous regulator changes, and broader institutional uncertainty are weighing on investment more than exports, cutting Mexico’s 2026 GDP forecast to 0.8%. Energy and telecom projects are particularly exposed as firms reassess legal protections and dispute resolution confidence.

Gas export reliability concerns

Repeated interruptions to Israeli gas exports since October 2023 have raised doubts about supply reliability for Egypt and Jordan. Energy buyers are arranging alternatives, while foreign partners such as SOCAR and Chevron expand roles, creating both resilience opportunities and heightened geopolitical sensitivity around regional energy trade.