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:
Chinese Economic Influence and Grey Capital
Chinese-linked businesses increasingly dominate sectors such as logistics, agriculture, and real estate, often operating through legal loopholes and nominee structures. This grey capital inflates export figures artificially and undermines local firms, distorting market competition. The infiltration raises regulatory and reputational risks, complicates enforcement, and may provoke geopolitical tensions affecting foreign investment and trade relations.
Tax Policy Reforms on Foreign Income
The Thai government is revising tax policies to exempt foreign income remitted within one to two years from taxation for residents and expatriates. These reforms aim to attract overseas capital, stimulate investment, and align with OECD standards. However, uncertainties remain regarding retroactivity and equal treatment, affecting financial planning for foreign investors and residents.
Labor Rights and Supply Chain Risks
A landmark lawsuit against Chinese EV maker BYD alleges systemic human trafficking and slave-like labor conditions in Brazil, highlighting vulnerabilities in migrant labor and supply chains. The case underscores reputational, legal, and operational risks for multinational corporations, emphasizing the need for stringent compliance and oversight to safeguard Brazil’s labor standards and international business relations.
Social Polarization and Migration Debates
Rising crime and political tensions have intensified debates on migration policies within Germany and neighboring countries. Statements by Danish Prime Minister Frederiksen reflect broader European concerns about mass migration’s impact on social cohesion and security, which may influence labor markets, regulatory frameworks, and cross-border cooperation affecting trade and investment.
UK-Morocco Economic Partnership and Policy Shift
The UK government’s recognition of Morocco’s claim over Western Sahara marks a significant foreign policy shift, unlocking a £33 billion economic partnership. This deal opens major infrastructure and healthcare contracts for UK firms, enhancing trade and investment opportunities in Africa, diversifying UK international economic relations, and supporting growth in emerging markets.
China’s Military Activities Near Australia
Chinese naval exercises near Australian waters, including live-fire drills without notification, raise security concerns and highlight regional geopolitical tensions. These actions threaten maritime trade routes and supply chain security, prompting calls for increased defense spending and strategic vigilance to safeguard Australia's economic and national security interests.
Technological Innovation in Energy Storage
Japan's development of uranium-based batteries to reuse radioactive waste represents a significant technological advancement. This innovation could position Japan as a leader in sustainable energy solutions, impacting global energy markets, supply chains for critical materials, and investment opportunities in clean technology sectors.
US Trade Tariffs and Export Challenges
The looming threat of steep US tariffs, including a potential 36% duty on Thai exports, creates significant uncertainty for Thailand’s export-driven economy. Legal battles over tariff authority and ongoing trade negotiations with the US are critical, as tariff outcomes will directly impact Thailand’s trade competitiveness, supply chains, and foreign investment inflows.
G7 Summit Priorities and Diplomacy
Hosting the 2025 G7 summit, Canada prioritizes global peace, energy security, critical mineral supply chains, AI-driven economic growth, and infrastructure investments. Diplomatic challenges include managing contentious invitations, such as India amid security concerns, and balancing relations with Mexico. Outcomes will influence Canada's international partnerships, trade policies, and geopolitical standing.
National Investment Strategy and FDI Boost
Egypt’s unified national investment strategy focuses on enhancing competitiveness, streamlining investment procedures via digital platforms, reducing non-tax burdens, and fostering public-private partnerships. The strategy aims to position Egypt as a regional hub for foreign direct investment (FDI), emphasizing transparent policies, fiscal incentives, and reliable energy access, thereby driving industrial growth and export diversification critical for global business operations.
Ukraine Sovereign Debt Restructuring
Ukraine's ongoing challenges with sovereign debt restructuring, including missed payments on GDP-linked warrants and Variable Rate Instruments (VRIs), impact investor confidence and financial stability. The government seeks sustainable terms aligned with IMF targets, balancing debt servicing with reconstruction needs. This uncertainty affects international investment strategies and Ukraine’s creditworthiness in global markets.
U.S.-Canada Trade Tariff Escalations
The doubling of U.S. tariffs on Canadian steel and aluminum to 50% has created significant disruption for Canada's metal industries, threatening integrated North American supply chains and causing job losses. The tariffs undermine export viability, prompt calls for retaliatory measures, and increase uncertainty, impacting investment decisions and trade dynamics between the two countries.
Media Polarization and Information Control
Media outlets in Turkey exhibit high polarization, with state-aligned and opposition media engaging in aggressive rhetoric. This media environment fosters social division and complicates transparent communication, affecting public perception, investor sentiment, and the reliability of information critical for business decision-making.
Ongoing Israel-Hamas Conflict
The persistent conflict between Israel and Hamas, including military actions and political stances such as Israel's refusal to allow a Palestinian state, significantly disrupts regional stability. This conflict impacts international trade routes, foreign investment sentiment, and supply chain reliability, while also influencing diplomatic relations and security costs for businesses operating in Israel.
European Political Developments and Elections
Political movements and elections across Europe, including France's Monaco visit and EU member states' referendums, influence policy continuity and regulatory environments. These developments affect investor confidence, cross-border cooperation, and the strategic outlook for French businesses operating within the EU framework.
Iran-Israel Conflict Impact
The escalating Iran-Israel conflict has triggered a surge in global oil prices, directly affecting Indonesia's economy through increased commodity costs, exchange rate volatility, and capital flow disruptions. Indonesia's reliance on energy imports exacerbates fiscal pressures, with oil prices rising above budget assumptions, threatening state budget stability and inflation, while also impacting global trade routes and investor confidence.
Labor Productivity Challenges
Japan ranks 29th among 38 OECD members in labor productivity as of 2023, highlighting structural inefficiencies. This affects competitiveness, wage growth, and operational costs for businesses. Investors and companies must factor in productivity constraints when evaluating Japan’s long-term economic prospects and workforce-related strategies.
Japan-South Korea Diplomatic Relations
Recent developments highlight Japan's commitment to stable and improved ties with South Korea under President Lee Jae Myung. Early summits and diplomatic engagements aim to ease historical tensions, fostering cooperation in trade, security, and regional stability. This rapprochement is critical for supply chain resilience and investment confidence in Northeast Asia.
Geopolitical Risks and Australian Market Volatility
Escalating tensions in the Middle East have dampened investor sentiment on the ASX, with defensive sectors like energy and utilities outperforming while materials, tech, and financials experience declines. The Australian dollar weakened below 65 US cents amid uncertainty, reflecting heightened risk aversion and potential impacts on foreign investment and capital flows.
Robust Economic Growth and Stability
India is projected to remain the fastest-growing major economy in FY26 with GDP growth estimates of 6.7%-6.8%, supported by sound macroeconomic fundamentals and a robust financial sector. The Reserve Bank of India advocates supportive monetary policy amid inflation moderation. Despite global risks like geopolitical tensions and supply chain disruptions, India's external sector resilience and manageable current account deficit underpin investor confidence.
Domestic Production and 'Made in Mexico' Initiative
The Mexican government and over 20 major businesses have committed to increasing domestic content in products sold nationwide, aiming to boost manufacturing jobs by 400,000. This voluntary pact supports Plan México's strategy to strengthen local industries, enhance supply chain integration for SMEs, and reduce reliance on imports, impacting investment and trade flows.
Bank of Canada’s Monetary Policy Dilemma
The Bank of Canada faces a precarious balance between managing inflation and cushioning the economy amid tariff-induced uncertainties. Despite strong Q1 GDP growth, tariff-related trade tensions and rising unemployment signal potential economic slowdown, complicating interest rate decisions that impact investment, consumer spending, and overall economic stability.
Export Support and Rebate Programs
The government has launched a modernized export rebate program with a budget of EGP 45 billion to enhance export competitiveness and resilience. The program incorporates sector-specific incentives, streamlined reimbursements, and inclusive eligibility criteria, supporting diverse industries and SMEs. Coupled with tax and customs reforms, it aims to expand Egypt’s global market presence and stimulate export-led growth.
Economic Reconciliation via Indigenous Business Acquisitions
A $100 million initiative by BDC and First Nations Bank of Canada aims to boost Indigenous business acquisitions, promoting economic reconciliation and inclusive growth. This program supports Indigenous communities in accessing financing and advisory services, fostering entrepreneurship, and integrating Indigenous enterprises into broader Canadian economic frameworks, enhancing diversity and sustainable development.
Suez Canal Economic Zone Development
The Suez Canal Economic Zone continues to attract significant foreign investment, exemplified by a $20 million industrial complex project with Chinese partners. Focused on export-oriented manufacturing, the zone enhances Egypt’s logistics and industrial capabilities, generates employment, and strengthens its position as a global trade and supply chain hub, critical for regional and international commerce.
Western Sanctions and Trade Disruptions
Extensive Western sanctions on Russia, including proposed US bills imposing 500% tariffs on countries importing Russian energy, significantly disrupt global trade and investment. These measures risk isolating the US from key partners like China and India, complicate supply chains, and increase costs, while Russia maintains economic resilience despite over 28,000 sanctions targeting its companies and individuals.
Financial Market Volatility and Currency Fluctuations
Heightened geopolitical tensions have led to sharp volatility in Israel's financial markets, with the Tel Aviv Stock Exchange experiencing significant index fluctuations. The shekel has weakened notably against the US dollar and euro amid fears of conflict escalation, affecting import costs, export competitiveness, and cross-border investment flows, thereby influencing corporate financial planning and risk management.
Geopolitical Tensions and Security Cooperation
Heightened geopolitical tensions, including Japan's condemnation of Israel's attack on Iran and concerns over North Korea, drive closer Japan-South Korea coordination. Defense ties with the UK are also strengthening. These dynamics affect regional stability, security-related trade, and multinational defense investments, influencing risk assessments for businesses operating in or with Japan.
Energy Security and Fuel Supply Challenges
Pakistan's fuel supply is critically impacted by disruptions in Iranian oil imports amid border closures and regional tensions. The government has raised domestic fuel prices and formed a high-level committee to monitor petroleum pricing and supply dynamics. Ensuring uninterrupted energy availability is vital to stabilizing markets, supporting industrial activity, and preventing inflationary shocks in a volatile geopolitical environment.
Political Instability and Knesset Dissolution
Imminent dissolution of the Israeli Knesset amid political deadlock introduces uncertainty in governance. This instability may delay economic reforms, affect regulatory environments, and create unpredictability for investors and multinational corporations operating in Israel, influencing strategic planning and risk assessments.
Automotive Market and Energy Transition
Despite being a major car manufacturer, Mexico faces high vehicle prices due to supply chain disruptions, taxes, and expensive fuel. Gasoline prices have tripled over 15 years, impacting operating costs. The government promotes electric vehicles, with imports from China and domestic EV development, signaling a strategic shift toward sustainable transport and new industrial opportunities.
Security Concerns and Regional Military Incidents
Cross-border missile interceptions, rocket attacks from Syria, and regional military escalations contribute to heightened security risks. These incidents affect investor confidence, insurance costs, and operational risks for businesses, particularly in logistics, infrastructure, and foreign direct investment.
Taiwan's Semiconductor Strategic Role
Taiwan dominates advanced semiconductor manufacturing, producing 90% of the world's most sophisticated chips vital to global technology and defense industries. Rising Chinese military provocations elevate Taiwan's geopolitical significance, prompting US investments under the CHIPS Act to diversify production and safeguard supply chains critical to economic and national security.
US Pressure on Narco-Linked Politicians
The US government is intensifying demands for Mexico to investigate and extradite politicians suspected of cartel ties, threatening economic repercussions such as tariffs. This diplomatic pressure complicates Mexico's internal politics, especially given accusations involving ruling party members, and impacts governance stability, anti-corruption efforts, and bilateral trade relations.
Stock Market Volatility and Investor Sentiment
Pakistan Stock Exchange exhibits heightened volatility driven by geopolitical tensions and disappointing economic indicators like the current account deficit. Investor risk aversion leads to bearish trends and reduced trading volumes, reflecting uncertainty in market confidence. However, intermittent modest gains occur amid optimism from IMF projections and government fiscal policies, indicating a fragile but cautious investment environment.
Airline Flight Suspensions and Resumptions
Following security threats such as missile attacks near Ben Gurion Airport, major airlines like Lufthansa and British Airways suspended flights to Israel, impacting tourism, business travel, and cargo transport. Gradual resumption of flights signals cautious normalization but ongoing risks affect logistics and international connectivity.