Mission Grey Daily Brief - May 24, 2025
Executive Summary
The last 24 hours have seen a series of major developments that reinforce the underlying fragility and complexity of the world’s political and economic environment. Global attention is fixed on growing trade tensions and tariff shocks, escalating instability in key political hotspots, and significant multilateral events that are shaping the future of alliances, trade, and investment flows. G7 nations are wrapping up meetings with more promises to tackle economic imbalances and respond to Russia’s war on Ukraine, as the world economy feels the tangible effects of protectionism and deglobalization. Meanwhile, new alignments among emerging economies are taking root, with India pushing for reform within the expanded BRICS coalition and China deepening ties with ASEAN amidst US tariff threats. Finally, internal crises in countries like Bangladesh and Venezuela highlight the persistent risks of political volatility.
Analysis
1. Intensifying Global Trade Tensions and the Threat of Fragmentation
Trade tensions between the world’s major economies have reached new heights this week. The G7 finance ministers, meeting in Canada, have expressed deep concern over what they label as “excessive imbalances” in the global economy and are considering stepped-up sanctions against Russia. However, the group is visibly split on U.S.-imposed tariffs—especially as President Trump’s administration continues to prioritize unilateral action and is seeking new trade deals, further unsettling long-standing economic partnerships. The G7’s communique highlights a consensus on the need for resilient supply chains and coordinated efforts to prevent distortive non-market practices—a thinly veiled reference to China’s state-subsidized model. While G7 consensus is crucial, internal friction and lack of explicit action on tariffs signal limited progress in stemming the tide of protectionism [G7 considers Ru...][G7 glosses over...][G7 finance mini...].
On the other front, the BRICS bloc—now expanded to ten members with Indonesia’s entry—has made a show of unity at their latest meeting in Brazil. India has called for the dismantling of export controls and reaffirmed its push for a rules-based, inclusive trading system, in sharp contrast to Western protectionist trends. The BRICS joint declaration and new trade governance frameworks aim to shield developing economies and reinforce South-South cooperation [India calls for...].
Amid these power plays, China has sealed a new free-trade deal with ASEAN that updates their 15-year-old agreement, adding highly relevant chapters on digital trade, green economies, and integrated supply chains. Both sides underscored their commitment to open trade in the face of US tariff war threats and indicated further moves to bypass Western-centric global institutions [China, Asean fi...]. Given that ASEAN and China remain each other’s top trading partners—with bilateral trade surging nearly 8% year-on-year and reaching nearly $1 trillion—this alliance is poised to buffer at least part of the shock from Western deglobalization efforts.
The combined impact of these trends is significant: The United Nations’ mid-year forecast now sees global GDP growth stumbling to just 2.4% in 2025, trade growth halving to 1.6%, and financial and investment flows faltering under the weight of uncertainty and mounting barriers. The costs of “decoupling” are particularly acute for developing countries facing debt risks and weak currencies, but even advanced economies in Europe and Asia are showing mounting strain [Press Release |...][Top Geopolitica...].
2. Ukraine, Russia, and G7 Policy Crossroads
The Ukraine conflict remains a central axis of geopolitical maneuvering. G7 finance chiefs have reiterated a united stance against Russia’s war but have adopted more subdued language than in the past, reflecting the shifting positions within the group since the U.S. political change last year. While “further ramping up sanctions” is on the table should ceasefire efforts stall, there is visible Western hesitancy to take steps that would trigger a spike in oil and gas prices, especially as voices in Europe argue that their economies cannot function without Russian raw materials [G7 considers Ru...][G7 glosses over...][Global economy ...].
Notably, Washington has stated it will not support new energy sanctions as long as Moscow appears serious about a negotiated settlement—a signal that realpolitik and economic imperatives are once again softening the West’s posture, much to the concern of those pushing for continued pressure on Moscow [Global economy ...]. Simultaneously, China has condemned new EU sanctions as “double standards,” stressing that most Western countries, in practice, maintain ongoing trade relations with Russia despite the rhetoric [China calls out...].
As direct channels between Russia and Ukraine have recently reopened for the first time since 2022—with Beijing’s support—the outlook remains highly fluid. Europe is recognizing its own limits in supporting the conflict without direct U.S. military and economic backing, and there is increasing debate over just how long coalition governments on the continent can sustain support, given public fatigue and mounting economic strain [Europe unable t...].
3. Shifting Alliances: China, Russia, and the Non-Aligned Bloc
The Xi-Putin summit and the AmurExpo economic forum this week have cemented what Russian and Chinese officials call “the best period in history” for their partnership. Business and governmental exchanges encompass advanced technology, energy, and joint infrastructure initiatives designed to insulate both economies from Western sanctions and diversify strategic dependencies [Chinese leader'...]. This partnership, underpinned by a shared disregard for ethical, human rights, and transparency standards, presents ongoing risks for international investors concerned about the rule of law and the potential for forced technology transfers or sanctions exposure.
Overlaying this, China’s strengthened position in Southeast Asia and overt stance against the West’s “economic coercion” has left U.S. and European policymakers searching for new frameworks to stabilize supply chains and maintain influence in the Indo-Pacific, even as democratic allies become increasingly wary of the growing China-Russia axis [China, Asean fi...][Top 5 Geopoliti...].
4. Flashpoints: Political Volatility and Democratic Backsliding
Institutional and social resilience are being tested in a number of critical emerging markets. In Bangladesh, Nobel laureate Muhammad Yunus, who heads the caretaker government after last year’s anti-corruption protests, has threatened to resign amid street protests and a deepening standoff with opposition leaders. With no election scheduled until June 2026, the risk of further social unrest and economic disruption is elevated [Yunus threatens...][Key Bangladesh ...].
In Venezuela, new elections are proceeding under a shadow of deep economic crisis and near-total opposition disarray, with projections of only 16% voter turnout and most seats expected to be retained by the ruling party. Economic contraction and inflation are rapidly eroding purchasing power and amplifying the real risk of further crisis-induced migration or social collapse [High voter abst...].
Democracy and media freedom are under fresh assault in Hungary, where a new bill threatens to curtail foreign funding for independent media under the guise of sovereignty protection, prompting widespread concern from global press groups and underscoring the trend of democratic backsliding even within the EU [World’s press c...].
Conclusions
The world’s business and geopolitical environment is entering a period of heightened unpredictability and risk. The continuing fracturing of the global economic system—manifested in tariff wars, scrambling for critical supply chain realignments, and the rise of large non-democratic alliances—presents brands and investors with fundamental choices about where and how to operate. While emerging alliances like BRICS and China-ASEAN offer new opportunities, they also carry significant exposure to governance, human rights, and corruption risks. Meanwhile, G7 unity is being strained both by internal disagreements and the economic limits of extending confrontational policies against Russia and China.
In this landscape, businesses would do well to proactively monitor political risk, diversify supply chain dependencies, and assess not just market opportunity but also exposure to autocratic or ethically problematic regimes. Will the ongoing tariff shocks become the “new normal” of global commerce? Are Western economies prepared to face the real economic pain of strategic decoupling, or will accommodation prevail? And with fragile democracies under stress, can free institutions withstand the authoritarian surge in both emerging and some established markets?
Mission Grey will continue to track these evolving themes—and help global businesses navigate the risks and seize the opportunities emerging in this historic moment.
Further Reading:
Themes around the World:
Concessões e PPPs de infraestrutura
O leilão do Aeroporto do Galeão (mínimo de R$ 932 milhões; outorga variável de 20% da receita bruta até 2039) sinaliza continuidade da agenda de concessões, criando oportunidades para operadores e fundos. Porém, reequilíbrios contratuais e intervenção regulatória seguem no radar.
Secondary Sanctions via Tariffs
Washington is expanding coercive tools beyond classic sanctions, including threats of blanket tariffs on countries trading with Iran. For multinationals, this elevates third-country exposure, drives deeper counterparty screening, and can force rapid rerouting of trade, logistics, and energy procurement.
Water treaty and climate constraints
Mexico committed to deliver at least 350,000 acre-feet annually to the U.S. under the 1944 treaty after tariff threats, highlighting climate-driven water stress. Manufacturers and agribusiness in northern basins face rising operational risk, potential rationing and stakeholder conflict over allocations.
Electrification push alters cost base
Government plans aim for electricity to reach ~60% of final energy consumption by 2030, reducing fossil dependence reportedly costing ~€60bn annually in oil and gas imports. Transition incentives may reshape fleet, heat and process investments, affecting capex timing and energy contracts.
Logistics and multimodal corridor buildout
Budget-linked infrastructure plans emphasize freight corridors, inland waterways and port connectivity to cut transit times and logistics costs. For global manufacturers, improved hinterland access can expand viable plant locations, though land acquisition, project execution and state capacity remain key risks.
Critical minerals alliance reshaping
Washington is building a “preferential” critical-minerals trade zone with price floors and stockpiling, pressuring partners to align and reduce China exposure. Canada’s positioning will affect mining, refining, battery investment and eligibility for U.S.-linked supply chains.
US-linked investment and credit guarantees
Taiwan’s commitment to roughly US$250bn of investment in the US, backed by up to US$250bn in credit guarantees, will redirect corporate capital planning. It may accelerate supplier localization in North America while raising financing, execution, and opportunity-cost considerations at home.
AI memory-chip supercycle expansion
SK hynix’s record profits and 61% HBM share are driving aggressive capacity and U.S. expansion, including a planned $10bn AI solutions entity plus new packaging and fabs. AI-driven tight memory supply raises input costs but boosts Korea’s tech-led exports.
USMCA review and tariff brinkmanship
The mandatory USMCA review and renewed U.S. tariff threats create high uncertainty for North American supply chains, especially autos, metals and agri-food. Firms should stress-test rules-of-origin compliance, pricing, and contingency routing as policy shifts can be abrupt.
Investment liberalization and market access
Saudi investment is surging, with total investment topping SR1.5 trillion ($400bn) in 2025 and FDI stock reaching SR1.05 trillion ($280bn) by Q3 2025. Capital markets opened wider from Feb. 1, reshaping entry, financing, and partnership strategies.
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 (Use and Access) Act shift
The DUAA’s main provisions are in force, expanding ICO investigative powers and raising potential PECR fines up to £17.5m or 4% of global turnover. Firms must reassess data-governance, consent, product design, vendor risk and UK‑EU data-transfer posture.
Energy export diversification projects
Canada is accelerating west-coast export optionality, including proposals for an Alberta-to-Pacific crude line and expansion of export routes. This could reshape long-term offtake, shipping, Indigenous partnership requirements, and permitting timelines for investors.
Export earnings and currency pressure
Port damage is delaying exports of grain and ore, with central bank warnings of lower export revenues and added import needs for fuel and energy equipment. This raises hryvnia volatility and payment risks, impacting pricing, working capital, and hedging strategies for importers/exporters.
State asset sales and privatization push
Government signals deeper private-sector role via IPO/asset-sale programs and state ownership policy, highlighted in Davos outreach. Deals such as potential wind-asset sales illustrate momentum. For FDI, opportunity is rising, but governance clarity and equal competition remain key.
Currency management and capital controls
Beijing’s preference for financial stability sustains managed exchange-rate policy and episodic tightening on capital outflows. Firms face repatriation frictions, FX hedging costs, and potential constraints on intercompany funding, dividends, and cross-border M&A execution timing and approvals.
Digital tax reporting expands to SMEs
HMRC’s Making Tax Digital for Income Tax begins April 2026 for self‑employed/landlords over £50k, moving to quarterly submissions via paid software; thresholds fall to £30k (2027) and £20k (2028). This increases compliance cost, process change and advisory demand.
Transición energética con cuellos
La expansión renovable enfrenta saturación de red y reglas aún en definición sobre despacho, pagos de capacidad e interconexión, clave para baterías y nuevos proyectos. Permisos “fast‑track” avanzan (p.ej., solares de 75‑130MW), pero curtailment y retrasos pueden afectar PPAs y costos.
Critical minerals investment competition
US–Pakistan talks and Ex-Im support for Reko Diq ($1.25bn) signal momentum in mining, alongside Saudi/Chinese interest. Opportunity is large but execution hinges on security, provincial-federal clarity and ESG safeguards, affecting upstream supply-chain diversification decisions.
Cybersecurity and hybrid interference exposure
Taiwan’s critical infrastructure faces persistent cyber and influence operations alongside military ‘grey-zone’ pressure. Multinationals should anticipate higher compliance expectations, stronger incident-reporting norms, and increased operational spending on redundancy, supplier security, and data integrity.
Semiconductor-led growth and policy concentration
Exports remain chip-driven, deepening a “K-shaped” economy where semiconductors outperform domestic-demand sectors. For investors and suppliers, this concentrates opportunity and risk in advanced-node ecosystems, while prompting closer alignment with allied export-control and supply-chain security priorities.
Pressão socioambiental na Amazônia
Protestos indígenas bloquearam terminal da Cargill em Santarém contra concessões e dragagem na bacia do Tapajós, alegando falta de consulta. O tema eleva risco de paralisações, due diligence socioambiental e exigências de rastreabilidade em cadeias agrícolas.
Capacity constraints and productivity ceiling
Business surveys show utilisation still elevated (around 83%+), signalling tight capacity and lingering cost pressures. Without productivity gains, growth can translate into inflation and wage pressures, affecting project timelines, construction costs, and the reliability of domestic suppliers for global value chains.
Critical minerals export leverage
Beijing is tightening oversight of rare earths and other strategic inputs, where it controls roughly 70% of mining and ~90% of processing. Export licensing, reporting and informal guidance can abruptly reprice magnets, EVs, electronics and defence supply chains, accelerating costly diversification efforts.
Macroprudential tightening hits credit
BDDK and the central bank tightened consumer and FX-credit rules: card limits must align with documented income, unused high limits can be reduced, restructuring is capped, and FX-loan growth limits were cut to 0.5% over eight weeks. Expect tighter liquidity and financing.
Lira depreciation and inflation stickiness
January inflation ran 30.65% y/y (4.84% m/m) while the central bank cut the policy rate to 37%, pushing USD/TRY to record highs. Persistent price pressures and FX weakness raise import costs, complicate pricing, and increase hedging needs.
Energy exports and regional gas deals
Offshore gas production and export infrastructure expansion (Israel–Egypt flows at capacity; Cyprus Aphrodite unitisation talks) underpin regional energy trade. However, operational pauses and political risk can disrupt supply commitments, affecting industrial buyers and energy-intensive sectors.
Technology dependence and import substitution gaps
Despite ‘technological sovereignty’ ambitions, Russia remains reliant on imported high-tech inputs; estimates suggest China supplies about 90% of microchips, and key sector self-sufficiency targets lag. Supply chains face quality, substitution, and single-supplier risks, plus heightened export-control exposure.
Energy Geopolitics and Trade Deals
U.S. trade negotiations increasingly bundle energy commitments and geopolitical conditions, as seen in tariff relief tied to partners’ changes in Russian oil purchases. This links market access to energy sourcing, complicating procurement strategies and increasing political risk in long-term offtake contracts.
Baht volatility and FX scrutiny
Election risk premia, USD strength, and gold-linked flows are driving short-term baht swings. The central bank is signalling greater operational FX management and scrutiny of non-fundamental inflows. Importers, exporters, and treasury teams should expect hedging costs and tighter FX documentation.
Improving external buffers and ratings
Fitch revised Turkey’s outlook to positive, citing gross FX reserves near $205bn and net reserves (ex-swaps) about $78bn, reducing balance-of-payments risk. Better buffers can stabilize trade finance and counterparty risk, though inflation and politics still weigh on sentiment.
Strategic port and infrastructure security
Debate over the China-leased Darwin Port underscores rising security-driven intervention risk in infrastructure. Logistics operators and investors should model contract renegotiation/compensation scenarios, enhanced screening, and potential operational constraints near defence facilities and northern bases.
Energy finance, Aramco expansion
Aramco’s $4bn bond issuance signals sustained global capital access to fund upstream, downstream chemicals, and new-energy investments. For traders and industrial users, this supports feedstock reliability and petrochemical capacity, while policy shifts and OPEC+ dynamics keep price volatility elevated.
External financing rollover dependence
Short-term bilateral rollovers (e.g., UAE’s $2bn deposit extended at 6.5% to April 2026) underscore fragile external buffers. Debt-service needs and refinancing risk can trigger FX volatility, capital controls, delayed profit repatriation, and higher country risk premia.
Carbon competitiveness policy uncertainty
Industrial carbon pricing (OBPS and provincial systems) remains central to decarbonization incentives, but is politically contested. Potential policy shifts create uncertainty for long-horizon projects in steel, cement, oil and gas, and clean tech, affecting capex, compliance costs, and supply contracts.
USMCA review and tariff risk
The July 2026 USMCA joint review is opening talks on stricter rules of origin, critical-minerals coordination, labor enforcement and anti-dumping. Fitch warns “zombie-mode” annual renewals. Uncertainty raises compliance costs and chills long-horizon manufacturing investment.