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:
Banking Sector Expansion and Innovation
The Egyptian banking market is projected to grow at a CAGR of 13.97% to $401.7 million by 2033, driven by AI adoption in credit scoring, fraud detection, and customer service. This digital transformation enhances financial inclusion, risk management, and operational efficiency, supporting SMEs and large enterprises, thereby strengthening financial infrastructure for trade and investment.
Cross-border Trade Disruption with Cambodia
Ongoing armed conflict and territorial disputes with Cambodia have led to border closures, causing estimated losses of 15 billion baht monthly and potential cumulative damage of 100 billion baht by year-end. This disrupts cross-border trade, labor supply, and regional economic integration, threatening Thailand's Eastern Economic Corridor development.
Cybersecurity Vulnerabilities in Business Infrastructure
Weak infrastructure and skills shortages expose South African firms to increasing cyberattacks, threatening data security and operational continuity. High ransomware and infostealer incidents target critical sectors, including government agencies. Cyber risks undermine investor confidence and disrupt supply chains, necessitating urgent investment in cybersecurity and regulatory compliance to protect economic stability.
Credit Rating Upgrade Impact
Egypt’s sovereign credit rating upgrade by S&P to 'B' and Fitch's stable affirmation reflect macroeconomic stability and reform progress. This enhances investor confidence, potentially attracting more foreign direct investment and lowering borrowing costs, which supports economic growth and financial market development, crucial for international trade and investment strategies.
US-China Trade Tensions and Tariffs
Renewed escalation in US-China trade disputes, including tariffs reaching up to 145% and retaliatory Chinese export controls on rare earths, disrupt supply chains and elevate market volatility. While recent diplomatic efforts offer a fragile truce, the risk of further tariff hikes and export restrictions continues to weigh heavily on global trade dynamics and corporate strategies.
National Security and Investment Screening
The UK National Security and Investment Act imposes stringent screening on acquisitions in sensitive sectors, including technology and AI. This regime increases regulatory scrutiny, potentially delaying or blocking foreign investments perceived as national security risks, thereby affecting cross-border M&A activity, capital flows, and strategic partnerships in critical industries.
International Isolation Risks
Israel faces growing diplomatic and economic isolation due to ongoing conflict and regional tensions. Reduced foreign direct investment, withdrawal of international partnerships, and potential trade restrictions threaten economic growth, innovation, and supply chain stability, compelling businesses to reassess risk exposure and operational dependencies in Israel.
Regulatory and Bureaucratic Burdens
Excessive regulations, complex bureaucratic procedures, and administrative delays are stifling investment and innovation in Germany. The regulatory cost burden, estimated at €60 billion annually, discourages business expansion and modernization, contributing to the country's declining competitiveness and deterring foreign investment.
Materials and Mining Sector Growth
The materials sector, especially metal mining, is a primary beneficiary of increased defense and infrastructure spending. Streamlined permitting processes are expected to expedite extraction of critical metals for military and industrial use, enhancing Canada's role in global commodity markets and supply chains.
Structural Economic Growth Constraints
South Africa’s economic growth remains subdued, hindered by infrastructure deficits, electricity shortages, and slow reforms. Moody’s forecasts growth below government targets, limiting job creation and fiscal consolidation. Weak private investment and persistent structural bottlenecks constrain competitiveness, deterring foreign direct investment and slowing recovery from prolonged stagnation.
Corporate Insolvencies Surge
Corporate insolvencies in Germany rose over 10% year-on-year in September 2025, reflecting persistent economic pressures including sluggish growth, high costs, and geopolitical risks. The increase follows the end of pandemic support measures, revealing a delayed wave of bankruptcies. Insolvency levels are near post-2005 highs, signaling structural challenges and financial distress across sectors.
Digital Transformation and Cybersecurity
Vietnam is advancing digital infrastructure and administration reforms, fostering growth in AI, fintech, and cloud computing sectors. Concurrently, the cyber insurance market is expanding rapidly, driven by increasing cyber threats and stringent data protection laws, highlighting the growing importance of cybersecurity risk management for businesses and investors.
Corporate Insolvency Surge in Germany
Corporate insolvencies in Germany rose by over 10% year-on-year in September 2025, reaching near-record levels. This reflects ongoing economic pressures including sluggish growth, high costs, and geopolitical uncertainties. The delayed insolvency wave follows the end of pandemic-era financial support, signaling persistent structural weaknesses and heightened risks for investors and creditors.
Rupiah Exchange Rate Stability
The Indonesian rupiah strengthened following dovish remarks by the U.S. Federal Reserve Governor, reflecting market expectations of interest rate cuts. Bank Indonesia's interventions and stable inflation underpin currency stability, influencing foreign investment flows, import costs, and overall economic confidence.
Commodity Exports and Mining Sector Constraints
Indonesia, the world's largest nickel producer, is advancing investments in battery materials and EV supply chains, exemplified by Anugrah Neo Energy Materials' planned $300 million IPO. However, mining regions experience slow economic growth due to export delays linked to incomplete smelter infrastructure, highlighting bottlenecks in value-added processing and export capacity that affect trade and investment.
US Government Shutdown Impact
The ongoing US government shutdown has disrupted federal operations, delayed key economic data releases such as nonfarm payrolls, and heightened political risk. This uncertainty dampens market confidence, complicates Federal Reserve policy decisions, and affects global economic forecasts and investment flows.
Escalation of US and EU Sanctions
The US and EU have intensified sanctions targeting Russia's core oil producers Rosneft and Lukoil, freezing assets and restricting transactions. These measures aim to cut off significant revenue streams funding Russia's war efforts, causing sharp declines in Russian stock markets and increasing geopolitical risk premiums globally. The sanctions also threaten secondary penalties for third-party entities, complicating international trade and investment.
Stock Market Performance and Risks
Indian stock markets ended Samvat 2081 with gains driven by strong bank earnings, tax reliefs, and favorable trade negotiations. However, risks such as US tariffs, liquidity constraints, and delayed earnings recovery could dampen investor sentiment. Market optimism hinges on resolution of trade disputes and sustained domestic consumption growth during the festive season.
Escalating Sanctions on Russian Energy Sector
The U.S. and EU have intensified sanctions targeting Russia's major oil producers, Rosneft and Lukoil, freezing assets and banning transactions. These measures disrupt Russia's core energy revenues, causing stock market declines and raising oil prices globally. The sanctions complicate Russia's export capacity and financial flows, pressuring Moscow's fiscal stability and military funding, while impacting global energy markets and supply chains.
Fiscal Deficit and Public Debt Concerns
Mexico's fiscal deficit remains elevated, projected at 4.1% of GDP in 2026, with public debt nearing 59% of GDP. Increased spending on social programs, debt servicing, and Pemex support constrains fiscal space. The IMF recommends more ambitious fiscal consolidation and tax reforms to stabilize debt, essential for maintaining macroeconomic stability and investor confidence in Mexico's sovereign creditworthiness.
Government Stimulus Boosts Economy
Thailand's new government launched a 44 billion baht stimulus package including co-payment schemes, cost-of-living relief, and tourism incentives, aiming to boost domestic consumption and public confidence. This short-term fiscal stimulus is expected to add 0.2-0.4 percentage points to GDP and support stock market gains, though structural reforms face political constraints.
Currency Volatility and Won Depreciation Risks
The Korean won has experienced sustained weakness against the US dollar, exacerbated by US-China trade tensions and domestic political instability. The Bank of Korea has issued verbal interventions and is monitoring risks closely, as prolonged depreciation could increase import costs, inflation, and capital outflows, impacting investment and economic stability.
US-China Trade Tensions
Escalating trade conflicts between the US and China, including tariffs up to 155% and export controls on critical technologies and rare earths, are causing significant market volatility. These tensions disrupt supply chains, increase costs for businesses, and create uncertainty for investors, impacting global trade flows and investment strategies.
Financial Sector Taxation and Regulatory Changes
The Turkish parliament is debating increasing corporate tax rates on financial sector companies from 20% to 25%, alongside stricter measures to protect firms' reputations. These regulatory changes may impact profitability and risk perceptions in the banking and financial services sectors, influencing investment decisions and market dynamics.
Security and Geopolitical Challenges
Pakistan faces serious internal security issues including insurgency in Balochistan and ongoing conflict with Taliban-backed Tehrik-i-Taliban Pakistan (TTP) along the Afghanistan border. These conflicts cause instability, displacement, and strain military resources, posing risks to economic activities, investor confidence, and regional trade dynamics.
Financial Regulatory Enhancements
Turkey is empowering its Financial Crimes Investigation Board (MASAK) with real-time authority to freeze bank accounts linked to suspicious activities. This move aims to enhance anti-money laundering efforts but raises concerns about increased government control over private enterprises, potentially affecting investor sentiment and corporate governance.
Shifting Geopolitical and Trade Relations with China
Vietnam’s public sentiment towards China is softening amid US-China trade tensions, facilitating sensitive bilateral projects like high-speed rail and economic zones. Enhanced cooperation with China may boost infrastructure and trade but requires careful navigation of historical tensions and regional geopolitical dynamics, impacting foreign policy and investment climates.
Energy Security and Fuel Imports
Despite producing over 600,000 barrels of crude oil daily, Indonesia imports most refined petroleum products due to aging refineries meeting only 60% of demand. This structural vulnerability exposes the economy to global price shocks and fiscal strain from subsidies, prompting government plans for large-scale refinery expansion and biodiesel mandates to enhance energy independence.
Multinational Corporate Exodus
A growing number of multinational companies are scaling back or exiting Pakistan due to unpredictable policies, high taxation, and regulatory volatility. This trend signals structural investment climate deterioration, resulting in job losses, weakened supply chains, and diminished foreign direct investment, further constraining economic growth prospects.
Thailand Plus One Investment Strategy
The 'Thailand Plus One' initiative positions Thailand as a regional hub for Japanese industrial investment, leveraging logistics strengths and integrating neighboring CLMV countries into supply chains. This strategy diversifies production risks, reduces costs, and supports sectors like automotive and electronics, but also shifts low-cost labor industries to neighbors, impacting domestic employment and regional competitiveness dynamics.
KOSPI Stock Market Rally and Investor Sentiment
The KOSPI index has reached record highs, driven by strong corporate earnings, especially in tech and semiconductor sectors, and increased foreign investment. However, the rally is concentrated in a few large-cap stocks, raising concerns about market breadth and sustainability amid macroeconomic and geopolitical risks, including tariff uncertainties and currency volatility.
Poverty and Social Inequality Amid Economic Recovery
Despite macroeconomic improvements and stock market gains, poverty and inequality persist, with nearly half the population living below the poverty line. Regional disparities, poor education, and malnutrition hinder human capital development, posing long-term risks to social stability and sustainable economic growth.
German Firms' Supply Chain Diversification
In response to pandemic-induced disruptions, German policymakers urge companies to diversify supply chains beyond China, targeting markets like Singapore and South Korea. While China remains a dominant trade partner, diversification aims to reduce dependency and enhance resilience. This strategic shift impacts investment decisions, regional trade dynamics, and supply chain configurations in Asia.
Economic Growth Challenges and Stimulus Measures
South Korea faces sluggish economic growth, with forecasts downgraded due to domestic political uncertainty, low consumer spending, and the lingering effects of the COVID-19 pandemic. The government has committed to maintaining fiscal stimulus and supportive monetary policies to bolster recovery, focusing on exports, infrastructure investment, and financial support for businesses and workers.
Strategic Supply Chain Realignments
Companies are actively pursuing 'China plus 1' and 'America plus 1' strategies to reduce reliance on single-country supply chains. This includes relocating manufacturing to Southeast Asia and diversifying funding sources, driven by geopolitical risks and trade uncertainties, which may increase operational costs but enhance long-term resilience and supply chain security.
Political Instability and Protests
Spain is experiencing extreme political tensions comparable to those in the US under Trump, driven by divisive domestic politics and pro-Palestinian protests. This unrest raises uncertainty, potentially dampening consumption and investment, and complicates legislative processes, including budget approvals, thereby increasing country risk for investors and businesses operating in Spain.