Mission Grey Daily Brief - June 11, 2025
Executive summary
The past 24 hours have brought a decisive shift on the global stage, as the United States and China have managed to halt an escalating trade dispute—at least temporarily—after marathon negotiations in London. This has captured the undivided attention of global markets, supply chain strategists, and international businesses, especially given parallel tariff escalations and legal wrangling involving other major economies like India and the EU. Meanwhile, tensions over US protectionist moves, ripple effects on allies and partners, and new sanctions dynamics surrounding Israel continue to fragment the post-globalisation landscape. Deeper economic data points hint at a slowing world economy, with the OECD now projecting the weakest global growth since 2020, largely due to uncertainty and shifting trade barriers. As multinational firms brace for further volatility, risk mitigation and value alignment are at the forefront of international decision-makers’ minds.
Analysis
US-China Trade Truce: Pressure Valve or Long-Term Solution?
After several weeks of rising tension, the United States and China have agreed to solidify and extend their recent trade truce, following two days of high-level negotiations in London. The outcome is a new ‘framework’ deal, expected to be ratified by President Trump and President Xi soon, that effectively recommits both sides to de-escalation on tariffs and export restrictions—terms originally brokered in Geneva only a month ago but quickly eroded amid ongoing disputes around rare earth minerals and US technology controls[U.S. and China ...][China has a val...][Trump tariffs l...]. Notably, China’s near-monopoly over rare earth exports emerged as a focal bargaining chip, with Beijing’s strategic restraint countered by Washington’s easing of certain export controls—but the US intends to retain curbs on critical tech. Though the mood has improved after the talks, underlying mistrust remains and the potential for future disruption is high, particularly if political rhetoric intensifies or enforcement lapses.
Recent policy moves have included a US extension of its tariff pause on numerous Chinese goods until August 31, 2025, providing temporary relief to importers and consumers and offering a window for further negotiations[Breaking: US Ta...]. However, this gesture cannot obscure the reality that US effective tariff rates on imports have already skyrocketed to 15.4%—the highest since the Great Depression era—triggering significant price increases, supply chain strain, and a measurable slowdown in global trade flows[Global economy ...]. Businesses should remain cautious about over-committing to China for critical components, especially as rare earth minerals and other strategic inputs remain exposed to sudden, non-market intervention or export controls. The fundamental clash—over technology access, supply chain sovereignty, intellectual property, and systemic values—has not been solved, only postponed.
US Protectionism’s Ripple Effects: India, the EU, and Global Growth
While diplomacy with China produces short-term relief, the US administration’s broader trade strategy continues on a protectionist path. On June 4, the US doubled tariffs on steel and aluminum imports, immediately impacting $4.56 billion worth of Indian exports and similar volumes from other partners like the EU[New Tariffs To ...][Key events and ...]. Indian steel is now effectively priced out of the US market, causing consternation in New Delhi and pressing Indian policymakers to seek a bilateral Free Trade Agreement as their most pragmatic route forward[Business News |...].
The OECD now warns that global GDP growth will slow to 2.9% in both 2025 and 2026—a sharp drop from the 3.3% seen in 2024—as a direct result of higher tariffs, increased cost structures, uncertainty, and deteriorating business and consumer confidence[Global economy ...]. US firms report direct hits to production, and retaliatory action by China, India, and the EU means trade equivalent to over 2% of world GDP now faces enhanced tariffs. The effect is compounded by the possibility of a broader trend away from "free world" values, as authoritarian powers such as China leverage state control over critical supply chains, and as countries with questionable environmental and human rights records use market access as leverage.
International Sanctions, Political Fragmentation, and the "New Multipolarity"
Overnight, diplomatic fissures deepened further as Canada, the UK, Norway, Australia, and New Zealand jointly imposed sanctions on two Israeli cabinet ministers for inciting violence against Palestinians in the West Bank. The US quickly condemned these sanctions and urged their withdrawal, highlighting diverging approaches among traditional allies regarding conduct in the Israel-Palestine conflict[U.S. condemns C...]. This applies additional pressure to the postwar order, signalling that coalitions are realigning over issues of accountability, human rights, and the definition of legitimate sanctions—a dynamic businesses with interests in sensitive regions or sectors ignore at their peril.
Meanwhile, ongoing economic uncertainty and border restrictions are undermining confidence in global business travel and investment flows. Positive sentiment in the global business travel sector dropped from 67% in late 2024 to just 31% in April 2025, and nearly 30% of business travel buyers anticipate fewer US-bound trips this year[Global corporat...]. This reflects a structural shift in globalisation and places new emphasis on diversifying operations and markets, especially toward regions more aligned with transparent, rules-based systems.
Value Alignment, Corporate Strategy, and the Return of Industrial Policy
The cumulative effect of these trends is a world in which international business strategy demands not just risk assessment but values-based decision-making. US tariff policy, for example, is prioritising economic nationalism over environmental and multilateral commitments—potentially undermining global climate goals at the very moment when the free and open world needs coordinated action[New Tariffs To ...]. Multinational firms looking for long-term resilience should rigorously vet their footprints, supply networks, and investment strategies for exposure to volatile, opaque, or unaligned environments. Europe and like-minded democracies continue to advocate for regulatory frameworks that encourage both ethical conduct and diversified trade; the evolving nature of US, Chinese, and illiberal state policies will test the business community’s collective response.
Conclusions
The latest moves between the US and China provide a temporary safety net for investors and global supply chains, but the threat of regressing into a full-blown trade war lingers under the surface, and the world economy’s momentum is visibly sputtering. The shifting fault lines—between protectionism and free trade, between value-driven alliances and opportunistic deals, between ethical and unaccountable governance—define the risk landscape for 2025 and beyond.
For business leaders and investors, the fundamental questions remain clear: Is your supply chain ready for the next shock? Are your markets properly hedged against adverse regulatory or political action? And as the world fragments into blocks with distinctly different values, governance standards, and risk appetites, where does your organization want to sit?
How will your company adapt as the center of gravity in trade, regulation, and values continues to shift? Will you prioritise resilience, transparency, and long-term value alignment, or chase after short-term gains in riskier, less accountable arenas? The events of June 2025 offer a sharp reminder: in today’s world, the intersection of geopolitics and geoeconomics is not an optional horizon scan, but a core leadership competency.
Further Reading:
Themes around the World:
National Investment Strategy Success
Launched in 2021, Saudi Arabia's National Investment Strategy has been pivotal in achieving Vision 2030 targets, including increasing private sector GDP contribution and non-oil exports. The strategy's reforms, incentives, and investor services have quadrupled FDI since 2017, fostering a competitive environment and attracting global companies to establish regional headquarters in the Kingdom.
Investor Sentiment and Stock Market Performance
Political turmoil and economic headwinds have led to Thailand’s stock market underperformance, with a decline of over 11% year-to-date, making it Asia’s worst performer. Foreign investors have withdrawn significant capital amid uncertainty, although cheap valuations and prospects of policy stabilization offer potential entry points. Market volatility remains elevated, influenced by regional geopolitical risks and domestic governance issues.
US Tariffs and Trade Restrictions
The US has imposed aggressive tariffs, including a 50% tariff on Indian imports, disrupting global trade flows. These tariffs create uncertainty for exporters, complicate supply chains, and prompt realignments in trade partnerships, notably influencing India's pivot towards China and affecting global market dynamics.
Rising UK Borrowing Costs and Fiscal Concerns
UK government borrowing costs have surged to their highest levels since 1998, reflecting investor anxiety over fiscal sustainability amid high debt and slow growth. Elevated gilt yields increase debt servicing costs, potentially leading to tax hikes and dampening investment. Political uncertainty and structural economic challenges exacerbate risks to financial markets and economic confidence.
Current Account Deficit and Trade Dynamics
Australia recorded its ninth consecutive current account deficit, driven by declining commodity prices, notably iron ore and coal, and increased imports such as non-monetary gold and travel services. This persistent deficit reflects structural trade challenges, affecting currency stability, foreign investment inflows, and Australia's external financial position.
Geopolitical Tensions and Security Risks
Taiwan faces heightened geopolitical insecurity due to strained US relations, domestic political challenges, and persistent threats from China. Increased defense spending and diplomatic efforts aim to bolster resilience, but Taiwan remains vulnerable to US policy shifts and China's military and economic pressure, complicating its strategic positioning in the Indo-Pacific.
US Scrutiny of Taiwan-China Supply Chain Links
Under US containment policies, Taiwanese firms are cautious about disclosing business ties with Chinese suppliers to avoid US regulatory backlash. The US emphasizes economic security, pressuring Taiwan to distance itself from Chinese supply chains. This dynamic complicates Taiwan’s external trade negotiations and forces companies to navigate sensitive geopolitical and economic constraints.
Geopolitical Tensions and Market Volatility
Military strikes, nuclear program concerns, and regional conflicts involving Iran have caused short-term market shocks, particularly in travel, leisure, and energy sectors. However, historical data suggests markets often recover quickly, presenting cautious long-term investment opportunities despite heightened geopolitical risks.
Federal Reserve Policy and Market Volatility
Investor concerns over Federal Reserve independence and potential interest rate cuts amid geopolitical and economic uncertainties contribute to market volatility. Changes in monetary policy influence bond yields, equity valuations, and the U.S. dollar, affecting capital flows and investment strategies globally.
UK M&A Market Volatility and Strategic Focus
UK merger and acquisition activity declined in volume and value amid market volatility, with investors prioritizing high-value, resilient deals in industrials, financial services, and technology sectors. Despite a cautious environment, easing interest rates and strong equity markets may foster renewed dealmaking, emphasizing quality and long-term growth potential over quantity.
Political Instability and Reform Challenges
France faces profound political instability with frequent government changes, including the fall of Prime Minister François Bayrou. This fragmentation hampers the passage of critical economic reforms, undermining investor confidence and risking prolonged economic stagnation. The political deadlock threatens to delay budget approvals and fiscal consolidation efforts essential for stabilizing public finances and sustaining growth.
Regulatory Framework Against Dumping
Saudi Arabia has strengthened its anti-dumping legal framework, including the 2022 Law of Trade Remedies, to protect local industries from unfair trade practices. This regulatory environment supports Vision 2030 goals by ensuring fair competition, safeguarding domestic manufacturers, and encouraging sustainable industrial growth amid global trade challenges.
Surging Rice Prices and Inflation Impact
Rice prices in Japan soared over 90% year-on-year due to supply disruptions from extreme weather and panic buying, contributing to inflation above the Bank of Japan's 2% target. This inflationary pressure is politically sensitive, affecting consumer sentiment and prompting government interventions, including emergency stock releases and policy shifts in agriculture, with potential impacts on domestic consumption and monetary policy.
Government Spending and Infrastructure Investment
Government expenditure has been a key driver in averting recession and supporting economic growth, though recent cutbacks in spending and infrastructure projects may dampen momentum. The shift underscores the need for increased private sector investment to sustain growth and improve productivity, affecting long-term economic resilience.
Government Market Intervention
Chinese authorities actively manage stock market stability through state-backed funds ('national team'), regulatory measures, and potential easing of short-selling restrictions. This intervention aims to sustain a controlled bull market, balancing growth with bubble risk, influencing investor behavior and market dynamics domestically and internationally.
Trade Finance Market Expansion and Digitalization
Saudi Arabia's trade finance market is projected to grow at a 3.14% CAGR to USD 693.7 million by 2033, driven by Vision 2030's economic diversification. AI integration enhances document processing, risk analytics, supply chain visibility, and blockchain-based settlements, significantly improving efficiency, risk management, and supporting non-oil sector growth.
Political Instability and Government Collapse Risk
France faces acute political instability with Prime Minister Francois Bayrou's government likely to fall after a confidence vote on September 8. This turmoil threatens to delay critical budget reforms aimed at reducing the national debt, undermining investor confidence and increasing economic uncertainty. The risk of government collapse has already rattled markets and could trigger prolonged fiscal and political deadlock.
Vietnam's Robust Economic Growth
Vietnam's economy expanded by 7.5% in H1 2025, outpacing regional peers like Indonesia and Malaysia. Supported by strong exports, manufacturing, and logistics, the World Bank projects sustained growth despite global uncertainties. This momentum underpins Vietnam's ambition to become a high-income country by 2045, attracting investors seeking dynamic emerging markets with solid macroeconomic fundamentals.
Supply Chain Disruptions and Tariffs
US-imposed tariffs on imports from countries including China and India, alongside Mexico's protective measures against Chinese goods, disrupt supply chains. The elimination of import exemptions affects e-commerce platforms and manufacturing inputs, compelling companies to reassess sourcing strategies and cost structures amid rising trade barriers.
Japanese Stock Market Outlook and Volatility
Japanese equities have reached historic highs, driven by corporate governance reforms, share buybacks, and foreign investment inflows. Analysts remain divided on future trends, citing factors such as U.S. tariffs, domestic consumption tax debates, and global liquidity conditions. The market's sensitivity to geopolitical and economic shifts underscores risks and opportunities for investors seeking exposure to Japan's industrial and technology sectors.
Legal Risks for Businesses in Occupied Territories
Finnwatch warns companies operating in Israel and occupied territories face legal and ethical risks linked to alleged violations of international law and human rights abuses. Businesses may be implicated in complicity if due diligence is inadequate. This scrutiny could lead to reputational damage, legal challenges, and calls for divestment, impacting supply chains and investment decisions in the region.
Currency Depreciation Benefits Exporters
The weakening of the Japanese yen has bolstered export competitiveness, particularly benefiting automakers and industrial firms by increasing overseas revenue value. However, currency volatility introduces risks for import costs and inflation. This exchange rate environment influences corporate profitability, trade balances, and investment decisions in Japan's globalized economy.
Bond Market Stress and Yield Volatility
Japanese Government Bonds (JGBs) have experienced yield spikes, with 30-year yields breaching historic highs. Rising yields reflect fiscal deficit concerns and global bond market trends, causing recalibrations among institutional investors. This volatility impacts corporate borrowing costs, pension fund valuations, and overall financial market stability, with spillover effects on equity markets.
Monetary Policy Uncertainty and Market Volatility
Uncertainty surrounding US Federal Reserve policies, exacerbated by political pressures from President Trump, has led to cautious investor sentiment in Mexican markets. The Mexican stock exchange (MEXBOL) has experienced volatility amid expectations for interest rate adjustments and inflation concerns, affecting capital flows and investment decisions in Mexico's financial markets.
Rising Sovereign Debt Costs and Bond Yield Spreads
French 10-year government bond yields have surged, surpassing those of several eurozone peers and nearing Italian levels. The widening yield spread against German bunds reflects investor concerns over France's fiscal sustainability amid political uncertainty. Elevated borrowing costs threaten to exacerbate debt servicing burdens, potentially triggering credit rating downgrades and increasing financing risks for both public and private sectors.
International Backlash and Market Reputational Risks
Israel faces growing international criticism and sanctions linked to its military actions in Gaza, including exclusion from major arms expos in the UK and divestment campaigns. This reputational risk could deter foreign investment, complicate defense exports, and increase operational challenges for Israeli companies in global markets.
Energy Security Challenges
Taiwan's near-total dependence on imported energy, especially fossil fuels and LNG, combined with the recent shutdown of its last nuclear power plant, poses significant risks to energy stability. Public resistance to nuclear power complicates efforts to enhance energy resilience, critical for sustaining its tech-driven economy and mitigating vulnerabilities to external geopolitical pressures, particularly from China.
Economic Growth and Fiscal Outlook
Thailand's GDP growth is modest, projected at around 2.2% in 2025 with risks of slowing further. Fiscal pressures from rising public debt and aging-related expenditures constrain government spending capacity. While inflation remains low, sustaining growth requires effective fiscal stimulus and investment in infrastructure and innovation to counter external headwinds.
Economic Instability and Debt Crisis
Pakistan faces severe economic instability with public debt surpassing PKR 80 trillion and a debt-to-GDP ratio nearing 80%. Inflation remains high at around 29%, with food inflation exceeding 35%, eroding purchasing power and fueling public unrest. Reliance on IMF loans and external borrowing creates uncertainty for investors and risks a default scenario, impacting trade and investment.
Monetary Policy and Interest Rate Expectations
Expectations of U.S. Federal Reserve rate cuts have influenced Asian markets, including Indonesia, by weakening the dollar and lowering financing costs. Bank Indonesia's monetary policy stance remains cautious, focusing on currency stabilization rather than immediate rate cuts, balancing inflation control with growth support amid political uncertainties and external economic pressures.
Regulatory and Banking Sector Transformations
Mexican banks CIBanco and Intercam are undergoing significant structural changes, including acquisitions and regulatory compliance efforts, to ensure operational continuity amid U.S. sanctions and financial scrutiny. These transitions aim to stabilize the financial sector, protect customers, and maintain investor confidence in Mexico’s banking system.
Corporate Sector Performance and IPO Activity
Saudi companies have shown mixed financial results with some sectors reporting profits and others losses amid market volatility. Noteworthy IPOs include Jamjoom Fashion Trading on the Nomu market, indicating ongoing capital market activity. Corporate restructuring, capital increases, and strategic acquisitions reflect efforts to adapt to evolving market conditions and investor expectations.
Expansion of Egypt’s IT and Digital Economy
Egypt’s IT market is projected to nearly triple by 2031, driven by government digital initiatives, 5G rollout, and growing enterprise demand for cloud and software services. This sector growth enhances Egypt’s competitiveness in the global digital economy, attracting investment and supporting innovation across industries.
Brazil-US Trade and Political Tensions
US tariffs and sanctions reflect broader geopolitical friction tied to Brazil's internal politics and alignment with China. Despite a US trade surplus with Brazil, tariff measures aim to pressure Brazil's international positioning. The political dispute has limited macroeconomic impact so far but raises risks of escalation, affecting Mercosur dynamics and regional trade stability.
Growing Foreign Investor Participation in Stock Market
Foreign investors are increasingly active in Saudi equities, accounting for up to 41% of buying activity despite overall market declines. Reforms easing foreign ownership and market access have enhanced Saudi stocks' appeal, signaling confidence in the Kingdom's long-term economic prospects despite near-term oil price pressures.
Economic Growth Moderation and Sectoral Slowdowns
Thailand’s GDP growth is projected at a modest 2.3% in 2025, reflecting a slowdown driven by weakening private consumption, manufacturing disruptions, and service sector declines. Temporary factors like refinery maintenance and automotive production pauses exacerbate the slowdown. These trends highlight vulnerabilities in domestic demand and industrial output, impacting investment and employment.