Mission Grey Daily Brief - May 31, 2025
Executive summary
The past 24 hours reveal a world balancing on the edge of shifting power dynamics, with global business and political risk at new highs. The ongoing stand-off between the US and China, deepening China-Russia ties, fresh escalation in the technological arms race, and legal whiplash around Trump’s tariff regime are all entwined in an environment that requires heightened vigilance for international businesses. Meanwhile, Russia's strategy in Ukraine, support from North Korea, and a shifting intelligence landscape underscore the risks of engaging in controversial jurisdictions. Business resilience is being tested as trade war uncertainty, European energy insecurity, and accelerating technological disruption continue to shape the global outlook.
Analysis
1. US-China Tensions and the Trade “Supercycle” Reignite Global Risk
The reactivation of sweeping tariffs under President Trump’s administration has thrown global business into disarray. A recent federal appeals court decision temporarily reinstated Trump’s tariffs, which had previously been deemed unconstitutional by a trade court. This legal limbo is contributing to dramatic market swings, raising costs, and causing companies to pause investment decisions. The International Monetary Fund (IMF) last month downgraded global growth by 0.5 percentage points to 2.8%, warning that the bounce—termed a “sugar rush” driven by stockpiling—could be short-lived as trade friction saps momentum later in the year. Japanese companies, for example, remain exposed due to the US representing 21 trillion yen (approximately $146 billion) in exports, with automobiles counting for 28% of the total. Meanwhile, global companies have reported $34 billion in costs directly attributed to the US trade war—costs that could balloon as tariff uncertainty persists [Global economy'...][BREAKING NEWS: ...][Economic Uncert...][Trump accuses C...][NexUZ-7].
Compounding these economic headwinds, President Trump has escalated rhetoric against Beijing, accusing China of "totally violating" the trade deal, and hinting at a doubling of tariffs on key imports. French President Emmanuel Macron, speaking at the Shangri-La Dialogue in Singapore, has underscored the risk these divisions pose to the global order, calling the US-China split "the main risk confronting the world" [Divisions betwe...].
2. China-Russia “No Limits” Friendship: A Unified Front Against the West
As Washington and Beijing butt heads, China and Russia have seized the moment to tighten their bilateral alignment. During high-profile talks in Moscow, Xi Jinping and Vladimir Putin signed documents to “deepen” what they term a “comprehensive strategic partnership for a new era.” Their joint statement, trumpeted by state media, positions their relationship as “the highest level in history,” aiming for even deeper cooperation in energy, technology, trade, and even satellite navigation [Xi and Putin ag...][China, Russia e...]. In many respects, this partnership is strategically designed to challenge the Western-led global order, with Putin boasting that “together, we defend the formation of a more just and democratic multipolar world order” [Xi and Putin ag...].
However, China faces a unique conundrum: while it seeks leverage over Moscow and sees economic gains from cementing Russia’s reliance, Trump’s push for a US-Russia “reverse Nixon”—cutting a deal on Ukraine with Moscow, sidelining Beijing—has left China scrambling to assert relevance. Recent US overtures to Russia have surprised and unsettled Chinese leaders, resulting in more aggressive diplomatic and economic moves to shore up ties with the EU and court international partnerships as insurance against strategic exclusion [What China fear...][China aims to i...].
3. Russia’s Escalating Hybrid Warfare and the Ukraine Front
On the ground, Russia’s war in Ukraine continues unabated, with Moscow suffering close to 1 million casualties and losing vast stores of hardware—an estimated 10,865 tanks and nearly 40,000 drones. Even as peace negotiations receive public lip service, evidence suggests the Kremlin continues to escalate, massing as many as 50,000 troops for new offensives in northeast Ukraine [Vladimir Putin'...]. North Korea’s support has become crucial: up to 11,000 North Korean troops are reportedly deployed in Russia, with millions of North Korean munitions and over 100 ballistic missiles delivered this year—grave violations of existing UN sanctions [‘Stabbed in the...][Russia and Nort...].
Russia’s response to Western efforts is increasingly subversive. Espionage campaigns, sabotage attempts, and cyber-attacks have intensified across Europe in what NATO officials now label the “largest counterintelligence operation since the Cold War.” Over 750 Russian diplomats have been expelled since 2022, and Russian military intelligence (GRU) units like 29155 and 54654 are aggressively ramping up sabotage operations. This comes as Russia adapts sanctions-busting strategies, maintaining a war chest largely thanks to oil revenues from Europe—Russia has outearned Ukraine threefold since the invasion, primarily from continued European gas and oil purchases [A 'reckless cam...][Russia won’t ag...].
4. The Global Technological Arms Race and Business Adaptation
The technological race—particularly in AI—has become a significant component of the geopolitical struggle. US and Chinese tech giants are now pressuring their respective governments for looser copyright and data regulations, citing the imperative to stay ahead of rivals. Meta’s recent launch of its Llama 4 open-source AI model signals a paradigm shift. Policymakers worry that the country dominating AI will accrue overwhelming economic, military, and cultural power. But the AI revolution is not innocent: deepfakes, digital scams, and regulatory gaps expose significant security and ethical risks, especially as authoritarian actors deploy technology for surveillance or disinformation [AI Radar: Geopo...]. As old supply chains reconfigure, US chip export restrictions are projected to cost tech behemoths like Nvidia up to $8 billion in quarterly sales, underscoring the heavy cost of compliance with the new global tech regime [RECENT GEOPOLIT...].
Conclusions
May 2025 stands out as a watershed moment, with the world entering what some strategists see as a “geopolitical risk supercycle.” The unprecedented legal and regulatory volatility, weaponization of trade, deepened authoritarian alignment, and escalation in hybrid conflict put extraordinary demands on international businesses.
For organizations seeking resilience, now is the moment to diversify supply chains, ramp up scenario planning, and re-examine exposure to jurisdictions with high risk of corruption, opaque governance, or flagrant human rights abuses. The risks of doing business in or with China and Russia have never been clearer. For those committed to the values of transparency, fair competition, and respect for human rights, the message is unequivocal: risk management is the cornerstone of sustainable international growth.
Questions remain: Can Europe and the US manage a united response to authoritarian assertiveness without succumbing to economic self-harm? Will global businesses seize the opportunity to shift toward more resilient, ethical, and diversified structures? As the multipolar world takes shape, who will write the rules—those who uphold them, or those who seek to bend them? The answers will determine not just market outcomes, but the fabric of the international system in the years ahead.
Further Reading:
Themes around the World:
Energy balance: gas, power reliability
Declining domestic gas output and seasonal demand spikes raise LNG import needs and elevate power-supply stress. Businesses face risks of higher tariffs, intermittent load management, and input-cost volatility for energy-intensive manufacturing. Energy contracts, backup generation, and efficiency investments are increasingly material.
Energy export squeeze and rerouting
Proposed EU maritime-services bans for Russian crude and tighter LNG tanker/icebreaker maintenance restrictions aim to cut export capacity and revenues (oil and gas revenues reportedly down about 24% in 2025). Buyers rely more on discounted, high-friction routes via India, China, and Türkiye.
Trade competitiveness and tariff headwinds
Businesses warn of weak exports and tariff pressures, including potential U.S. measures affecting regional trade. Firms should expect tougher price competition versus Vietnam and Malaysia and prioritize rules-of-origin compliance, diversification of end-markets, and scenario planning for new trade barriers.
Critical minerals investment opportunities, risks
Ukraine is advancing licensing and production-sharing models for strategic minerals, including lithium projects with large capex (reported up to US$700m initial; longer-term >US$1.8bn). Potential upside is high for EU battery supply chains, but war-risk insurance, permitting integrity, and infrastructure security remain decisive.
Halal certification mandate October 2026
Indonesia will enforce a broad “mandatory halal” regime from October 2026, and authorities are accelerating certification for SMEs and market traders. Importers and FMCG, pharma, and cosmetics firms must adjust labeling, ingredient traceability, audits, and supply-chain documentation to avoid disruption.
Digitalização financeira e Pix corporativo
A expansão do Pix e integrações com plataformas de pagamento e logística aceleram liquidação e reduzem fricção no varejo e no B2B, melhorando capital de giro. Ao mesmo tempo, cresce a exigência de controles antifraude, KYC e integração bancária para operações internacionais.
Seguridad: robo de carga y extorsión
El robo a transporte de carga superó MXN 7 mil millones en pérdidas en 2025; rutas clave (México‑Querétaro, Córdoba‑Puebla) concentran incidentes y se usan inhibidores (“jammers”). Eleva costos de seguros, inventario y escoltas, y obliga a rediseñar rutas y SLAs.
Electricity contracts underpin competitiveness
Battery makers and other electro-intensive industries are locking in long-term power contracts with EDF; Verkor signed a 12-year deal alongside its Bourbourg gigafactory. Secured low-carbon electricity is becoming a key determinant of cost, investment viability, and export pricing.
Macroeconomic rebound with fiscal strain
IMF projects Israel could grow about 4.8% in 2026 if the ceasefire holds, driven by delayed consumption and investment. However, war-related debt, defense spending and labor constraints pressure fiscal consolidation, influencing taxation, public procurement priorities, and sovereign risk pricing.
Mining investment incentives scale-up
The Mining Exploration Enablement Program’s third round offers cash incentives up to 25% of eligible exploration spend plus wage support. Combined with aggressive licensing expansion, it accelerates critical minerals supply, raising opportunities in equipment, services, offtake, and local partnerships.
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.
LNG export surge and permitting
DOE/FERC are accelerating LNG export permitting and returning applications to “regular order,” driving new capacity filings (e.g., Corpus Christi expansion) and long-term 15–20 year contracts. Benefits include energy supply diversification; risks include oversupply and price volatility by 2030.
State-asset sales and privatization
Government is preparing ~60 state-owned companies for transfer to the Sovereign Fund or stock-market listings, signaling deeper restructuring. This expands M&A and PPP opportunities but requires careful diligence on governance, labor sensitivities, valuation, and regulatory approvals.
Ciclo de juros e inflação
Com Selic em 15% e inflação em 12 meses perto de 4,44% (abaixo do teto de 4,5%), o mercado precifica início de cortes em março, possivelmente 50 bps. Isso afeta custo de capital, demanda doméstica, hedge cambial e valuations.
Escalating sanctions and secondary risk
The EU’s 20th package expands energy, banking and trade restrictions, adding 43 shadow-fleet vessels (around 640 total) plus more regional and third‑country banks. This raises secondary-sanctions exposure, contract frustration risk, and compliance costs for global firms transacting with Russia-linked counterparts.
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.
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.
US tariffs hit German exports
US baseline 15% EU duty is biting: Germany’s 2025 exports to the United States fell 9.3% to about €147bn; the bilateral surplus dropped to €52.2bn. Automakers, machinery and chemicals face margin pressure, reshoring decisions, and supply-chain reconfiguration.
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.
Immigration tightening and talent constraints
Stricter U.S. visa policies are disrupting global talent mobility. H‑1B stamping backlogs in India reportedly extend to 2027, alongside enhanced vetting and a wage-weighted selection rule effective Feb 27, 2026, raising staffing risk for tech, healthcare, and R&D operations.
State-ownership shift and privatization pipeline
Cairo is signaling greater private-sector space via the State Ownership Policy, IPO/asset-sale plans, and “Golden License” fast-tracking. Opportunities are rising in ports, logistics, manufacturing, and services, but execution risk persists around valuation, governance, and military/state-linked competition in key sectors.
External debt rollovers, FX buffers
Pakistan’s reliance on short-term bilateral rollovers and Chinese commercial loans keeps reserves fragile; a recent $700m repayment cut gross reserves to about $15.5bn. Tight buffers raise devaluation risk, restrict profit repatriation and disrupt import-dependent supply chains.
Suez Canal pricing incentives
Egypt is using flexible toll policies to win back volumes, including a 15% discount for container ships above 130,000 GT. Such incentives can lower Asia–Europe logistics costs, but shippers should model scenario-based routing and insurance premiums given residual security risk.
Defense localization and offset requirements
Saudi Arabia is expanding defense industrialization, targeting over 50% localization of defense spending by 2030; localization reached 24.89% by end‑2024. New SAMI subsidiaries and industrial complexes increase requirements for local content, technology transfer, and Saudi supplier development across programs.
Migration and visa integrity tightening
Australia is tightening migration settings and visa oversight, affecting talent pipelines. Skilled visa backlogs and stricter student ‘Genuine Student’ tests are increasing rejection and processing risk, while Home Affairs is considering tougher sponsor vetting after exploitation cases—raising HR compliance demands for employers.
Electricity market reform uncertainty
Eskom restructuring and the Electricity Regulation Amendment rollout are pivotal for stable power and competitive pricing. Debate over a truly independent transmission entity risks delaying grid expansion; 14,000km of new lines need about R440bn, affecting project timelines and energy-intensive operations.
Climate law and carbon pricing momentum
Thailand is advancing a first comprehensive Climate Change Act, with carbon-pricing and emissions-trading elements discussed in public reporting. Exporters to the EU and other low-carbon markets will face rising MRV and product-footprint demands, influencing supplier selection and capex.
Sanctions, compliance, crypto enforcement
Ukraine is expanding sanctions against entities and individuals supporting Russia’s defence and financial networks, including crypto payment and mining channels linked to component procurement. This raises counterparty, KYC/AML and re-export control burdens for regional traders and service providers, especially across hubs like UAE and Hong Kong.
Carbon border adjustment momentum
Australia’s Carbon Leakage Review recommends an import-only border carbon adjustment starting with cement/clinker, potentially extending to ammonia, steel and glass. This would mirror the Safeguard Mechanism and reshape landed costs, supplier selection, and emissions data requirements for importers.
Quality FDI and semiconductors
Registered FDI reached US$38.42bn in 2025 and realised FDI about US$27.62bn (highest 2021–25). Early-2026 approvals topped US$1bn in Bac Ninh and Thai Nguyen, with policy focus on semiconductors, AI, and higher value-added supply chains.
Regulatory Change for Logistics and Retail
Proposed reforms to allow 24-hour online operations and “dawn delivery” for big-box retailers are contested by labor groups over night-work burdens. If adopted, it could intensify last-mile competition, reshape warehousing shifts, and increase compliance exposure around working-time rules.
Electricity reform and grid bottlenecks
Load-shedding has eased, but transmission expansion is the binding constraint. Eskom’s plan targets ~14,000–14,500km of new lines by 2034 at ~R440bn; slow build rates risk delaying IPP projects, raising tariffs, and constraining industrial investment.
Immigration politics and labor supply
Foreign labor is now a core election issue. Japan plans to accept up to 1.23 million workers through FY2028 via revised visas while tightening residence management and enforcement. For employers, this changes hiring pipelines, compliance burdens, and wage/retention competition.
Tight fiscal headroom and tax risk
Economists warn the Chancellor’s budget headroom has already eroded despite about £26bn in tax rises, raising odds of further revenue measures. Corporate planning must factor potential changes to NI, allowances, subsidies, and public procurement priorities.
Hydrogen-Roadmap bleibt für Wärme unsicher
Restrukturierungen im Wasserstoffsektor und Debatten über überdimensionierte Infrastruktur deuten auf Verzögerungen beim H2-Hochlauf. Für Wärmeanwendungen (H2-ready Kessel, Spitzenlast, Industrie-Wärme) bleibt die Import- und Preisunsicherheit hoch, was Investitionen in H2-kompatible Assets risikoreicher macht.
Renewables, batteries and green hydrogen
Large-scale clean-energy buildout is accelerating: the $1.8bn ‘Energy Valley’ project includes 1.7 GW solar plus 4 GWh storage, and a 10 GWh/year battery factory in SCZONE is planned. Green hydrogen/ammonia export plans target first shipment by 2027.