US Tariff Escalation and Trade Wars

Recent US tariff threats against China, the EU, and South Korea have intensified global trade tensions, disrupting supply chains and raising costs. Tariffs averaging 18%—the highest since 1934—are largely borne by US consumers and businesses, impacting inflation and investment strategies.

CUSMA’s Uncertain Future and Renegotiation

The Canada-US-Mexico Agreement faces an uncertain future, with President Trump calling it ‘irrelevant’ and considering separate bilateral deals. The upcoming review could disrupt established trade flows, regulatory certainty, and investment strategies for firms operating in North America.

Trade Imbalances and Export Disruptions

Ukraine’s 2025 trade deficit reached $44.5 billion, with exports down 3% and imports up 20%. Key export sectors—agriculture and metals—face declining volumes due to infrastructure attacks, logistical challenges, and increased competition, directly impacting foreign exchange earnings and supply chain reliability.

Foreign Direct Investment Rebound

Turkey attracted $12.4 billion in FDI in the first 11 months of 2025, a 28% increase year-on-year. The EU accounts for 75% of inflows, with major investments in trade, ICT, and food manufacturing, signaling renewed international investor confidence.

Regulatory Uncertainty and Investment Delays

Ongoing legal challenges to US tariffs and Korea’s legislative process for outbound investment funds delay the execution of major bilateral trade and investment agreements. This regulatory uncertainty complicates strategic planning for multinational firms operating in or with South Korea.

Real Estate Liberalization and Mega-Projects

Recent legal reforms allow foreign ownership of land and property, sparking global investor interest. Mega-projects like NEOM and the Red Sea Project, combined with digitalization and AI-driven innovation, are transforming the real estate sector and urban infrastructure landscape.

China-Pakistan Economic Corridor Expansion

CPEC 2.0 is broadening into agriculture, IT, minerals, and logistics, with China pledging up to $10 billion in new investments. This deepens Pakistan’s integration with Chinese supply chains and technology, but increases exposure to geopolitical and regulatory risks for international firms.

Regulatory Reform and Ease of Doing Business

Recent legal and regulatory reforms, including the repeal of obsolete statutes and streamlined customs and tax processes, are improving India’s business climate. These measures enhance transparency, reduce compliance costs, and support foreign investor confidence in long-term operations.

Energy Transition and Nuclear Expansion

South Korea’s commitment to build two new nuclear reactors by 2038 reflects a strategic pivot toward clean energy and carbon neutrality. This policy shift impacts energy-intensive industries, investment in renewables, and long-term infrastructure planning.

Retaliatory Tariffs and Regulatory Risks

The EU is considering €93 billion in retaliatory tariffs and regulatory measures targeting US goods and services. Finnish firms operating in or exporting to the US could face new barriers, compliance costs, and restricted market opportunities.

FDI Surge and Investment Momentum

Foreign direct investment in India surged 73% to $47 billion in 2025, driven by services, manufacturing, and data centers. Major global tech firms announced multi-billion-dollar investments, reflecting confidence in India’s policies, supply-chain integration, and digital infrastructure.

Technology Export Controls and Geopolitical Rivalry

US technology export controls, especially targeting China, continue to escalate. This restricts access to advanced semiconductors and dual-use technologies, prompting retaliatory measures and complicating cross-border R&D, investment, and supply chain strategies for global tech firms.

Declining Foreign Investment and Policy Uncertainty

Foreign direct investment dropped 82% year-on-year, reflecting high taxes, inconsistent regulation, and bureaucratic inefficiencies. The Special Investment Facilitation Council (SIFC) aims to streamline approvals, but investor confidence remains fragile, impacting long-term capital flows and supply chain decisions.

Geopolitical Risks and Regional Diplomacy

Egypt’s proximity to regional conflicts, especially Gaza and Sudan, creates persistent geopolitical risks. Diplomatic efforts focus on regional stability, but disruptions can impact trade, investment sentiment, and supply chains, especially via the Suez Canal and border regions.

Geopolitical Tensions Disrupt Trade

Escalating US–China and US–Venezuela tensions heighten global trade uncertainty, impacting Thai exports, energy prices, and supply chains. Businesses face increased logistics costs and market volatility, especially in energy-intensive and export-oriented sectors, requiring robust risk management and market diversification strategies.

US-Canada Trade Tensions Escalate

President Trump’s threats of 100% tariffs on Canadian exports, triggered by Canada’s partial trade agreement with China, mark a dramatic shift in North American trade relations. These tensions inject volatility into cross-border supply chains, investment planning, and the upcoming CUSMA review.

Technology Export Controls and Decoupling

The US maintains and expands technology export controls, particularly targeting China and sensitive sectors like semiconductors and AI. These measures drive supply chain decoupling, compliance complexity, and strategic realignment for technology firms and global investors.

Labor Market Saudization Intensifies

The government has raised Saudization rates to 60% in key private sector roles, including marketing and sales, and restricted senior positions to nationals. These measures impact expatriate hiring, increase compliance costs, and require strategic workforce adjustments for international businesses.

Policy Focus on High-Tech and Green Industries

China’s government is prioritizing policy support and stimulus for high-tech, green development, and services to sustain growth. This includes targeted measures for AI, advanced manufacturing, and clean energy, shaping the competitive landscape for both domestic and foreign businesses in these sectors.

Competitive Tensions and Strategic Alliances

Major French automakers, including Renault and Stellantis, are expanding their electrified portfolios but show reluctance to fully align on joint battery ventures. This rivalry shapes the pace of innovation, localization of supply chains, and the scope for international partnerships.

Semiconductor Policy Reshapes Supply Chains

The US imposed a 25% tariff on advanced semiconductor exports to China, while striking a landmark $250 billion investment and tariff reduction deal with Taiwan. These moves aim to boost US chip manufacturing and supply chain security, but risk further decoupling and global supply chain realignment.

Foreign Investment and Real Estate Growth

Australia’s real estate market is projected to reach USD 306 billion by 2034, driven by population growth, infrastructure investment, and foreign capital. Government incentives and AI-driven innovation are reshaping property markets, but regulatory changes and housing affordability remain critical factors for investors.

Selective Human Rights Stance and Policy Risk

South Africa’s foreign policy inconsistencies—especially its selective approach to human rights and alliances with authoritarian regimes—raise reputational and policy risks. This undermines diplomatic credibility and could impact international partnerships, sanctions exposure, and investor confidence.

Market Consolidation and Developer Shakeout

Regulatory complexity and higher entry barriers from the Shelter Act are expected to drive consolidation in Poland’s construction sector. Smaller firms may exit or be acquired, favoring larger, capitalized players and international investors seeking stable partners for large-scale shelter projects.

Drone Strikes Disrupt Supply Chains

Ukrainian drone and missile attacks on Russian refineries and infrastructure in 2025 caused a 25% drop in energy income and the lowest refinery deliveries since 2010. These disruptions threaten supply reliability and raise operational risks for businesses dependent on Russian energy.

Critical Minerals and Mining Ambitions

With $2.5 trillion in mineral reserves, Saudi Arabia is investing $110 billion to become a regional mining and processing hub. Strategic partnerships, especially with the US, aim to reduce supply chain dependence on China and position the Kingdom as a key player in global mineral supply chains.

Tech Sector Investment Amid Uncertainty

Despite geopolitical turmoil, Israel’s government and private sector continue to invest heavily in technology, with initiatives like the Yozma Fund and major projects such as Nvidia’s new campus. These investments sustain Israel’s global tech leadership but are vulnerable to regional instability and global capital flow shifts.

Semiconductor Sector Faces Geopolitical Pressure

South Korea’s semiconductor industry is under pressure from evolving US tariff policies and investment demands, as well as competition with Taiwan for favorable US trade terms. These dynamics threaten Korea’s global market share and could force further US-based investment by Korean firms.

Agricultural and Resource Export Diversification

Australia continues to diversify export markets and products, leveraging new trade agreements and investments in minerals, agriculture, and technology. However, exposure to external shocks—such as Chinese trade actions or global commodity price swings—remains a significant risk for international investors and supply chains.

Macroeconomic Stabilization and Reform Momentum

Pakistan has achieved notable macroeconomic stabilization, with inflation dropping to 4.5–5.5%, policy rates declining to 10.5%, and foreign reserves rising to $16.1 billion. Structural reforms, fiscal discipline, and privatization are improving investor sentiment and positioning Pakistan as a more attractive investment destination.

Regulatory Reforms for Foreign Investment

Sweeping reforms to business, visa, and property laws are opening more sectors to foreign ownership, simplifying bureaucracy, and enhancing expat residency options. These changes aim to boost FDI and position Thailand as Southeast Asia’s leading expat and investment destination.

Labor Market Tightness and Immigration Policy

US manufacturing and tech sectors face acute labor shortages, with 600,000 vacancies in 2025. Immigration reforms for skilled workers are under discussion, but persistent tightness may drive up labor costs and disrupt expansion plans for global investors.

Manufacturing Push Through Deregulation

India aims to triple exports to $1.3 trillion by 2035 by prioritizing manufacturing in 15 sectors and launching the National Manufacturing Mission. The focus is on regulatory simplification, building manufacturing hubs, and reducing red tape rather than heavy subsidies, to boost competitiveness and attract investment.

Regulatory and Political Volatility

Frequent regulatory changes—including environmental rollbacks, immigration crackdowns, and shifts in tax enforcement—are heightening operational risks for international businesses. The Trump administration’s aggressive use of executive power and unpredictable policy reversals are forcing companies to build greater flexibility and contingency into their US strategies, impacting investment timelines and compliance costs.

Critical Minerals and Mining Expansion

Saudi Arabia is investing heavily to develop its $2.5 trillion mineral reserves, including rare earths, gold, copper, and lithium. Strategic partnerships with the US, Canada, Brazil, and Chile aim to position the Kingdom as a global mining and processing hub, diversifying the economy and supply chains amid rising geopolitical competition.

Political Stability Amid Global Tensions

Brazil’s diversified international relations and diplomatic tradition help mitigate risks from external interference, notably from the US. Political stability and global leadership ambitions support a favorable environment for long-term investment and trade strategies.