Mission Grey Daily Brief - May 27, 2025
Executive Summary
The past 24 hours have been marked by dramatic escalation in the Russia-Ukraine conflict, with Russia launching its largest drone and missile barrage since the start of the war while diplomatic and economic pressures mount. President Trump, after months of ambiguous rhetoric, has leveled unusually harsh criticism at Vladimir Putin and raised the possibility of new sanctions—while European leaders urge swift, united action in response to Moscow’s brutality. Meanwhile, significant moves on tariffs and global trade policy have momentarily eased market volatility: Trump has delayed his threatened 50% tariffs on EU imports, and the US and China have agreed to roll back tariffs for at least 90 days, sparking cautious optimism in international business circles. In economic developments, India’s emergence as the world’s fourth largest economy and Costa Rica’s record foreign investment reinforce the diverging fortunes of regional markets. However, deep political unrest in Bangladesh underscores the persistent risks in less stable jurisdictions. The evolving US-China decoupling, China’s growing role in sanctions circumvention for Russia, and the global scramble for supply chain resilience continue to shape the risk landscape for international business.
Analysis
1. Russia Scales Up Attacks on Ukraine, West Mulls Harder Sanctions
Over the weekend and into Monday, Russia launched an unprecedented wave of drone and missile strikes against Ukraine, with Ukrainian officials recording at least 355 drones and nine cruise missiles in a single night—the largest aerial assault since the start of the invasion in 2022. Civilian casualties have mounted, and air raid alarms have become a constant in Ukrainian cities. This escalation starkly refutes the narrative, propagated by Moscow and, until recently, echoed by President Trump, that Russia is seeking a negotiated settlement. Instead, Russia appears more intent than ever on subduing Ukraine by force, emboldened by perceived Western hesitation and war fatigue [Russia targets ...][Ukraine Says Hi...][Trump realising...].
President Trump, long criticized for his conciliatory stance toward Moscow, has for the first time called Putin "absolutely crazy" and warned of new sanctions if Moscow does not relent. However, the administration’s actual policy response remains uncertain—Trump’s remarks oscillate between the threat of harsh measures and the possibility of "just backing away" from involvement, a stance that unsettles both Kyiv and European capitals. French President Macron and other EU leaders have explicitly called for massive new sanctions, warning that the very credibility of the US and its allies is at stake [Trump blows hot...][Trump Blows Hot...][Trump realising...]. European states are also removing range restrictions from weapons shipments to Ukraine, signaling potential for wider escalation. Meanwhile, Russia’s economy is showing signs of severe strain: inflation is running at 7.6% annually, key commodity exports are down, and the Kremlin itself warns of "hypothermia" risks for its GDP [Trump realising...].
For international businesses, the situation in Russia and its commercial satellites remains highly risky: the threat of rapidly intensifying sanctions is real, even as Russia’s own ability to provide stable conditions for investment is eroding. The war's trajectory and Western resolve will shape not only the fate of Ukraine but also the global environment for compliance, secondary sanctions, and supply chain stability.
2. Trade Policy Whiplash: US Tariff Threats, EU Delay, and a US-China Truce
President Trump’s headline threat to impose 50% tariffs on EU imports rattled global markets last week, but a last-minute phone call with EU Commission President von der Leyen saw the deadline pushed back to July 9. The delay has been welcomed as a temporary reprieve—both sides announced readiness for "swift and decisive" negotiations, while European and Asian markets rallied in response. Analysts expect more volatility ahead, with Trump’s style of brinkmanship and unilateral pressure likely to remain in play through summer [Business News |...][Stock market to...][KSE-100 sheds o...][Trump news at a...].
In a separate breakthrough, the US and China have agreed to a 90-day mutual rollback of tariffs on each other’s goods, offering global businesses a breather from the trade escalation and easing stock market nerves. The truce is carefully circumscribed and billed as temporary; there is no illusion in policy or business circles that the underlying decoupling anxiety has abated. Rather, this “pause” sits atop enduring strategic competition—US outbound investment restrictions targeting China (especially in semiconductors, AI, and quantum computing) are about to tighten, with Congress and the Trump administration united on the need to "de-risk" US exposure to Chinese tech [CSRI Quarterly ...][US-China Tensio...][US and China ag...].
Supply chains, especially in advanced technology and military applications, remain vulnerable to policy volatility as countries scramble for resilience at the expense of low-cost efficiency. For businesses, the lesson is to treat every truce as provisional, maintain diversified supplier bases, and brace for continued turbulence in the global trading framework.
3. Geopolitics of Sanctions and Global Supply Chains: China’s Complicity and New Regulation
Beyond the headlines, scrutiny over China’s facilitation of Russian sanctions evasion is intensifying. Hong Kong has become a hub for re-exporting sensitive goods to Russia, and Chinese commodity trade is seen as underpinning parts of Moscow’s war effort. US and EU authorities are signaling greater vigilance, and there is rising talk in Washington of dismantling privileges, such as the Hong Kong dollar’s USD peg, if sanctioned activity continues apace [CSRI Quarterly ...].
The fast-moving regulatory environment has real business implications. The US is rolling out the first-ever restrictions on outbound investment into China within critical technology sectors, and there are fresh moves in Congress to codify and expand these controls, especially on public market investments in sanctioned Chinese entities. Companies exposed to China through direct investment, supply chains, or trading relationships face compounding risks: the threat of secondary sanctions, loss of market access, cyber sabotage, and sudden regulatory shifts [US-China Tensio...].
Meanwhile, the clean-tech sector is caught in the crossfire of US-India-China trade dynamics. Trump's proposed “reciprocal” tariffs on imported solar modules threaten to halve India’s US-bound solar exports and may ultimately flood Indian markets with excess Chinese supply, undermining the country’s clean energy ambitions and complicating the global push for decarbonization [Trump tariffs t...]. These developments reinforce the need for multinational firms to factor regulatory, ethical, and resilience considerations into all major operational and investment decisions in China and Russia, which both represent high-risk, high-barrier environments antithetical to free and democratic business principles.
4. Diverging Economies: India, Costa Rica, Bangladesh
While much attention is on great power rivalry, emerging markets show shifting fortunes. India has officially become the world's fourth largest economy, and its markets are surging on the back of strong growth data, a bumper central bank dividend, and relief from delayed US tariffs. Foreign institutional investors remain net buyers, and momentum in sectors such as banking, manufacturing, and technology is robust [Business News |...][Stock market to...].
Costa Rica has recorded its highest-ever FDI inflow in 2024, up 14% year-on-year, driven by its reputation for stability, sustainability, and skilled talent. Manufacturing, especially in advanced electronics and medical devices, now dominates its FDI profile. The country’s consistent democratic governance, commitment to rule of law, and green ambitions make it a beacon for ESG-conscious investors seeking alternatives to higher-risk jurisdictions [Green, stable, ...].
By contrast, Bangladesh has slipped into profound political crisis, with ongoing protests, stalled reforms, and sharply falling foreign investment—down 71% year-on-year. The interim government’s legitimacy is openly questioned, and violent street clashes mix with resurgent radicalism, raising serious security risks for foreign firms. These divergent trends illustrate the extent to which stability, democratic accountability, and a predictable policy environment are the ultimate competitive advantages for global investment [Intense politic...].
Conclusions
The past day underscores the volatility and complexity of the current global business environment. Russia’s renewed brutality and the West’s slow, fragmented response highlight the dangers of wavering on principle and commitment. The “pause” in US-EU and US-China trade hostilities provides only temporary market comfort; structural rivalries and trust deficits persist. For businesses, strategic withdrawal from Russia, careful recalibration in China, and prioritizing investment in stable, transparent, and democratic countries is less a moral stance than a risk management imperative.
As we look ahead:
- Will Western resolve crystallize into a new, unified sanctions regime that can truly constrain Moscow, or will wavering embolden autocratic adventurism?
- Is the tariff détente a genuine opening for a rules-based global economy, or a brief lull before another escalation?
- How can businesses leverage the stability offered by countries like Costa Rica and India while managing the geopolitical fallout of great power friction?
In a world where shocks are the new normal and the line between political and commercial risk is blurred, the premium on agile strategy, diversified operations, and deep understanding of the political environment has never been higher.
Further Reading:
Themes around the World:
Energy grid attacks and rationing
Sustained Russian strikes on 750kV/330kV substations and plants are “islanding” the grid, driving nationwide outages and forcing nuclear units to reduce output. Power deficits disrupt factories, ports, and rail operations, raise operating costs, and delay investment timelines.
Digital and privacy enforcement intensity
France’s CNIL stepped up enforcement, with 2025 sanctions reportedly totaling about €486m, focused on cookies, employee monitoring and data security. Multinationals face higher compliance costs, faster audit cycles, and greater liability for cross‑border data transfers and AI use.
Industrial zones and SCZONE expansion
The Suez Canal Economic Zone continues upgrading ports and terminals (including new container-handling capacity), positioning Egypt for nearshoring and regional distribution. Benefits include improved clearance and industrial clustering, but investors must assess land allocation terms, utility reliability, and FX-linked input costs.
AB Gümrük Birliği modernizasyonu
AB ve Türkiye, Gümrük Birliği’nin güncellenmesi ve uygulamanın iyileştirilmesi için çalışmayı yeniden canlandırıyor; EIB operasyonlarının kademeli dönüşü de gündemde. İlerleme, tarım-hizmetler-kamu alımları kapsaması, uyum maliyetleri ve AB pazarına erişim/menşe kurallarında değişim yaratabilir.
Border, visa and immigration digitisation
Home Affairs is expanding Electronic Travel Authorisation and pursuing a digital immigration overhaul using biometrics and AI to cut fraud and delays. If implemented well, it eases executive mobility and tourism; if not, it can create compliance bottlenecks and privacy litigation risk.
Escalating US tariff regime
Average US import tariffs rose to about 13% in 2025 (from ~2.6% in 2024), with studies finding ~90–95% of costs borne domestically. Rapidly shifting sector tariffs (notably metals) heighten pricing volatility, contract risk, and sourcing reconfiguration.
Labor shortages, immigration and automation
A cabinet plan targets admission of ~1.23 million foreign workers by March 2029 across 19 shortage sectors, while new political voices advocate replacing labor with AI. Companies must plan for wage inflation, onboarding/compliance, and accelerated automation to stabilize operations.
Government funding shutdown risk
Recurring shutdown episodes and looming DHS funding cliffs inject operational risk into travel, logistics, and federal service delivery. TSA staffing and Coast Guard/FEMA readiness can degrade during lapses, affecting airport throughput, cargo screening, disaster response, and contractor cashflows.
Reconstruction-driven infrastructure demand
Three years after the 2023 quakes, authorities report 455,000 housing/commercial units delivered, while multilateral lenders like EBRD invested €2.7bn in 2025, including wastewater and sewage projects. Construction, materials, logistics and engineering opportunities remain, with execution and procurement risks.
Semiconductor tariffs and reshoring push
A new 25% tariff on certain advanced semiconductors, alongside ongoing incentives for domestic capacity, is reshaping electronics and AI hardware economics. Firms face higher input costs near-term, while medium-term investment flows shift toward U.S. fabs amid persistent dependence on foreign suppliers.
US tariff shock and AGOA risk
US imposed 30% tariffs on South African exports in 2025, undermining AGOA preferences and creating uncertainty for autos, metals, and agriculture. Exporters face margin compression, potential job losses, and incentives to re-route supply chains or shift production footprints regionally.
USMCA review and stricter origin
The 2026 USMCA joint review is moving toward tighter rules of origin, stronger enforcement, and more coordination on critical minerals. North American manufacturers should expect compliance burdens, sourcing shifts, and potential disruption to duty-free treatment for borderline products.
Rates at peak, easing uncertain
With Selic around 15% and the central bank signalling data-dependence ahead of possible March cuts, corporate funding, FX and demand conditions remain volatile. A smoother disinflation path could unlock refinancing and capex, but wage-led services inflation is a key risk.
Regulatory shocks at borders
Abrupt implementation of Decree 46 food-safety inspections stranded 700+ consignments (~300,000 tonnes) and left 1,800+ containers stuck at Cat Lai port, exposing clearance fragility. Firms should plan for sudden rule changes, longer lead times, higher testing costs and contingency warehousing.
Agua y clima: riesgo transfronterizo
México se comprometió a entregar al menos 350,000 acre‑pies anuales a EE. UU. bajo el Tratado de 1944 y a pagar adeudos previos, tras amenazas arancelarias. Sequías y asignaciones industriales pueden generar paros, conflictos sociales y exposición comercial en agroindustria.
Maritime security and tanker seizures
Washington is weighing direct seizure of Iranian oil tankers in international waters, while Iran has seized foreign‑crewed vessels near Farsi Island. This elevates war-risk premiums, route diversions and force‑majeure clauses for Gulf trade, impacting energy, chemicals and container flows through Hormuz.
Fraud warnings pressure onboarding controls
Recurring FCA warnings on unauthorised online trading sites highlight persistent retail fraud. Regulated platforms face rising expectations on KYC, scam detection, customer communications and complaints handling, while banks and PSPs may tighten de-risking of higher-risk flows.
Civil defence and business continuity demands
Government focus on reserves, realistic exercises, and city resilience planning raises expectations for private-sector preparedness. Multinationals should update crisis governance, employee safety protocols, and operational continuity plans, including data backups, alternative sites, and supplier switching.
Infraestrutura portuária e concessões
Portos movimentaram recorde de 1,4 bilhão de toneladas em 2025 (+6,1%), com contêineres +7,2%. Leilões e autorizações somaram investimentos bilionários. Para comércio exterior, melhora capacidade e reduz gargalos, mas exige gestão de tarifas, regulação e SLAs logísticos.
Geopolitical realignment of corridors
With European routes constrained, Russia deepens reliance on non-Western corridors and intermediaries—through the Caucasus, Central Asia, and maritime transshipment—to sustain trade. This raises reputational and compliance risk for firms operating in transit states, where due diligence on beneficial ownership and end-use is increasingly critical.
Labor localization tightening (Saudization)
New Nitaqat and profession-specific quotas raise Saudi hiring requirements, including 60% Saudization in key sales/marketing roles from April 2026, plus tighter job-title restrictions. Multinationals face higher payroll costs, talent shortages in niche skills, and operational risk if noncompliant.
BoJ normalization lifts funding costs
The Bank of Japan’s cautious tightening bias—policy rate lifted to 0.75% in December and markets pricing further hikes—raises borrowing costs and may reprice real estate and equities. Firms should revisit capex hurdle rates, refinancing timelines, and counterparty risk.
Immigration compliance crackdown on sponsorship
New offences targeting adverts for false visa sponsorships and intensified enforcement reflect tougher Home Office posture. Employers in logistics, care, hospitality and tech face higher due-diligence and audit expectations, potential licence risk, recruitment friction and reputational exposure in supply chains.
Export rebound and macro sensitivity
January exports hit a record $65.85bn (+33.9% y/y) and a $8.74bn surplus, led by semiconductors. Strong trade data supports industrial activity, but also increases sensitivity to cyclical tech demand, US trade actions, and won volatility—key for treasury, sourcing, and inventory planning.
Macroeconomic recovery and rate cuts
Inflation has eased to around 1.8% with a stronger shekel, reopening scope for Bank of Israel rate cuts. Cheaper financing may support investment, yet currency strength can squeeze exporters and pricing, influencing hedging strategies and contract denomination choices.
Non‑tariff barrier negotiation squeeze
U.S. pressure is expanding from tariffs to Korean rules on online platforms, agriculture/quarantine, IP, and sector certifications. Firms should expect compliance costs, product approval delays, and heightened trade-law scrutiny as Korea–U.S. FTA mechanisms and side talks intensify.
Sanctions and export-control compliance
Canada’s alignment with allied sanctions—especially on Russia-related trade and finance—raises compliance burden across shipping, commodities, and dual-use goods. Businesses need robust screening, beneficial-ownership checks, and controls on re-exports via third countries to avoid enforcement exposure.
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.
Business investment drag and policy uncertainty
UK GDP growth was only 0.1% in Q4 2025 and business investment fell nearly 3%, the biggest drop since early 2021, amid budget uncertainty. Multinationals should expect cautious capex, softer demand, and heightened sensitivity to regulatory or political shocks.
Aranceles y reconfiguración automotriz
Aranceles de EE. UU. y peticiones de México para reducir tasas a autos no conformes con T‑MEC presionan exportaciones. Cierres/ajustes de plantas y potencial compra por BYD/Geely muestran reconfiguración; sube el escrutinio sobre “backdoor” chino y el riesgo de medidas.
Illicit logistics hubs and environmental risk
Malaysia’s Johor area has become a key staging hub, with roughly 60 dark‑fleet tankers loitering for ship‑to‑ship transfers before onward shipment to China. Concentration increases accident/spill risk, port-state scrutiny, and sudden clampdowns that can strand cargoes and disrupt chartering.
Defense spending gridlock and procurement
A roughly US$40B multi‑year defense plan is stalled in parliament, risking delays to U.S. Letters of Offer and Acceptance and delivery queues. Uncertainty around air defense, drones and long‑range fires investment affects investors’ risk pricing and operational resilience planning.
Wettlauf Wärmepumpe gegen Fernwärme
Industrie und Versorger konkurrieren um Haushalte: Wärmepumpen-Installationskapazitäten versus Fernwärmeanschluss. Das führt zu volatilem Auftragseingang, Preisdruck und Engpässen bei Handwerk/Planung. Internationale Zulieferer müssen Kapazitäten flexibel steuern und lokale Partnernetze stärken.
Monetary easing amid sticky services
UK inflation fell to 3.0% in January while services inflation stayed elevated near 4.4%, keeping the Bank of England divided on timing of rate cuts. Shifting borrowing costs will affect sterling, financing, consumer demand, and capex planning.
Electronics PLI and ECMS surge
Budget 2026 expands electronics incentives, including a ₹40,000 crore electronics PLI outlay and ECMS scaling, with production reportedly up 146% since FY21 and ~$4bn FDI tied to beneficiaries. Multinationals gain from supplier localization, but disbursement pace and rules matter.
Critical minerals bloc reshaping rules
The U.S. is pushing a preferential critical-minerals trade zone with price floors, reference pricing, and stockpiling (Project Vault), amid China’s dominant refining share. Canada is engaged but not always aligned, affecting mining investment, offtake deals, and EV/defence supply chains.