Mission Grey Daily Brief - July 11, 2025
Executive Summary
The world enters the second week of July gripped by escalating trade wars, the largest aerial assault yet in the Russia-Ukraine conflict, and deepening instability in the Middle East’s critical shipping corridors. A dramatic surge in US tariffs on key goods—copper, pharmaceuticals, and more—sent shockwaves through global markets and left US allies scrambling to respond. Meanwhile, Russia launched its most massive drone and missile barrage on Ukraine since the war began, forcing NATO into heightened alert and threatening regional—and even global—security. In the Red Sea, a devastating Houthi attack has further imperiled global trade, prompting fears that the conflict could spiral into something much wider. These developments underscore an environment shaped by volatility, deepening geopolitical divides, and mounting risks for international business.
Analysis
US Trade War Escalates: Tariffs Shake Global Markets
President Trump has unleashed a new wave of tariffs, sending tremors through the global economy. On July 10, Trump announced punitive measures including a 50% tariff on copper imports and tariffs as high as 200% on pharmaceuticals, vowing more levies to come on semiconductors and other strategic goods. Canada and Brazil were directly targeted—Canada with a 35% tariff and Brazil with a threatened 50% levy, ostensibly tied to Brazil’s prosecution of ex-president Bolsonaro. Japan and South Korea were also hit with 25% tariffs, with the White House warning of further country-specific trade punishment if demands are not met [US copper price...][Politics News: ...][Breaking News, ...][Amid More Tarif...].
The immediate market reaction was volatile: copper futures in the US soared 13% to record highs while prices fell elsewhere, as traders anticipated exemptions or shifting demand. Simultaneously, the Dow Jones Industrial Average dropped over 400 points after the tariffs on Japan, South Korea, and others were announced [Market dips aft...]. Central banks from Malaysia to Australia slashed interest rates, hoping to shield their economies from tariff-induced shocks and global supply chain realignments [Banks predict i...].
These tariffs are already rippling through supply chains: US businesses and consumers face rising costs, especially for critical materials like copper, while global exporters are left scrambling for alternative markets. The risk of retaliatory measures looms large, with the Brazilian and Canadian governments promising counter-actions and Asian partners threatening to revisit trade negotiations. Businesses with complex, globally distributed supply chains may face short-term disruptions, and the longer-term effect may be the acceleration of “decoupling” trends in global commerce—particularly between the US and non-aligned economies [US copper price...][Banks predict i...][NBC News - Brea...].
Largest Russian Drone Strike on Ukraine to Date—And a Hardening of Western Resolve
Within hours of renewed US pledges to ramp up support for Ukraine, Moscow launched the most powerful aerial attack since the war began: 728 drones and 13 missiles targeted cities across Ukraine, including Kyiv and major military airfields. This surpassed previous records by more than 200 drones. NATO jets scrambled in response, and the attacks resulted in casualties and widespread infrastructure damage, though Ukrainian air defenses intercepted the majority of drones [NATO jets scram...][Breaking News, ...][World News | Ru...].
The strikes came on the heels of Trump’s sharp criticism of Putin, with new sanctions now being discussed in the US Congress—including a potential 500% tariff on goods from any country buying Russian energy. The US quietly resumed some weapons shipments to Ukraine and signed a pivotal coproduction deal with Denmark to establish Ukrainian weapons manufacturing outside of the war zone—an unprecedented step aimed at ensuring supply even if home production falls under fire [Trump’s had eno...][UN Chief Guterr...].
NATO leadership’s warnings about coordinated Russian and Chinese aggression are gaining traction, with Secretary-General Mark Rutte emphasizing the increasing likelihood of simultaneous crises in Europe and the Indo-Pacific if the world remains complacent [NATO Chief Warn...]. The massive drone attacks, when coupled with Russia’s ramped-up military production, reinforce the urgent need for supply chain resilience, particularly for defense, technology, and critical infrastructure sectors across free-world economies.
Red Sea Crisis: Houthi Attacks Sink Ships, Threaten Global Supply Chains
After months of attacks on shipping, the Yemeni Houthi group struck again, sinking a Liberian-flagged, Greek-owned cargo ship and killing at least four crew, with several others missing or abducted. The U.S. Embassy in Yemen confirmed that survivors were taken hostage, and the attack marked the second such incident this week [Amid More Tarif...][After a barrage...]. Israel, in coordination with the US, retaliated with strikes on Yemeni ports and a captured ship, while public calls for US B-2 bombers to target Houthi positions reflect an atmosphere of rapidly escalating risk [After a barrage...].
The Red Sea remains one of the world’s critical shipping lanes, handling over $1 trillion in goods annually. Disruptions are already forcing rerouting through lengthier, costlier passages, amplifying delays and costs for global businesses. Insurance premiums for vessels transiting the area have soared, and the risk of a broader regional war—implicating Iran and perhaps extending to the US or its allies—has rarely been higher.
Underlying Market and Political Turbulence
Amid these crises, global markets are seesawing. US stock indices, after a period of remarkable resilience, sold off on tariff news and international uncertainty. In Asia, Japan’s Nikkei fell as government officials protested new US tariffs, underscoring the tension between longstanding security alliances and the new age of transactional trade policy [World News | As...]. Meanwhile, climate-driven disasters such as the deadly Texas floods (death toll at 121) highlight growing non-political risks to business continuity and public trust in government agencies dealing with crisis response [ABC News - Brea...][NBC News - Brea...].
Conclusions
The developments of the last 24 hours starkly underline a new era of geopolitical and geo-economic confrontation. Businesses are now navigating a world with new and rising costs, the constant threat of international escalation, and the reality that global supply chains are no longer insulated from war or high politics. Companies should think seriously about supply chain resilience, diversification, and political risk—particularly in sectors affected by the US tariff regime, key commodity markets, and shipping dependent on exposed or unstable routes.
With a resurgent Russia accelerating military production and a US policy turn toward aggressive economic combat, are we barreling toward new, even more entrenched global blocs? Will allied cooperation be enough to counter these divided, weaponized economic and political landscapes? How should business weigh the opportunity of market access against the risks—especially in autocratic or high-corruption environments with poor records on human rights and rule of law?
The world is no longer just interconnected—it is interdependent in ever more fragile ways. The Mission Grey platform will continue to monitor these themes as they develop, helping clients to position themselves against the unpredictabilities of this new global reality.
Stay alert. Agile risk management, strategic foresight, and values-based decision-making are more essential than ever in today’s volatile world.
Further Reading:
Themes around the World:
Banking Sector Resilience Amid Volatility
Despite macroeconomic headwinds, Pakistan’s banking sector remains well-capitalized with a Capital Adequacy Ratio of 21.4%. Deposits grew by 17.7%, and nonperforming loans are managed with strong provisions. However, loan contractions and market volatility persist due to geopolitical tensions and US trade policies, reflecting cautious optimism but underlying vulnerabilities in financial markets.
US Tariffs and Political Tensions
The US imposed a 50% tariff on most Brazilian imports as a political retaliation linked to legal actions against former President Bolsonaro. Despite the high nominal rate, exemptions and Brazil's commodity export profile limit economic damage. The tariffs have strained US-Brazil relations, pushing Brazil closer to China and strengthening President Lula's domestic position ahead of 2026 elections.
Sustainable Finance and Policy Reform Needs
To secure long-term economic growth, Pakistan must accelerate reforms in sustainable finance, corporate governance, and policy frameworks. Stable, predictable regulatory environments are essential to attract foreign investment, particularly in green industries. Addressing policy inconsistency and improving contract enforcement will enhance competitiveness, foster inclusive growth, and mitigate climate-related economic risks.
Social Unrest and Labor Market Pressures
Proposed austerity measures, including spending cuts and public holiday abolitions, have sparked widespread social opposition, strikes, and protests. This social unrest exacerbates political instability and could disrupt supply chains and business operations, while labor market tensions may affect productivity and investor confidence in the medium term.
Climate Change Impact and Disaster Risks
Severe climate-induced floods have devastated key agricultural regions, damaging crops and infrastructure, exacerbating fiscal pressures, and disrupting food supplies. These disasters threaten economic growth, elevate inflation, and increase unemployment, highlighting Pakistan's acute vulnerability to climate change and the urgent need for enhanced climate finance, adaptive infrastructure, and policy reforms to mitigate long-term socio-economic risks.
Potential Escalation of Sanctions and Secondary Measures
Discussions of a 'second phase' of sanctions, including targeting payment systems, crypto exchanges, and imposing secondary tariffs on Russian oil buyers, signal possible tightening of economic pressure. However, enforcement difficulties and geopolitical considerations, such as reluctance to sanction China, limit the immediate effectiveness and scope of these measures in the medium term.
Chinese Investments via Private Equity Funds
China is increasing indirect investments in South Korea through private equity funds (PEFs), raising economic security concerns. Regulatory gaps allow Chinese capital to gain influence over Korean core technologies and strategic assets, threatening supply chain control. Experts urge Seoul to adopt stricter oversight similar to the US CFIUS system to enhance transparency and protect critical industries from foreign control.
Foreign Land Acquisition and National Security Concerns
Increased foreign purchases of Japanese land, especially by Chinese entities, raise concerns over national security and local resource control. Calls for regulatory reforms and vacancy taxes reflect political sensitivity. Potential restrictions could impact foreign direct investment and real estate markets, influencing cross-border capital flows.
Rising Cost of Living and Wage Stagnation
A significant majority of Canadians report financial strain due to rising prices for essentials like food and housing, outpacing wage growth. This cost-of-living crisis impacts consumer spending, labor market dynamics, and social stability, posing challenges for businesses reliant on domestic demand and workforce productivity.
Nuclear Program Developments
Iran's advancement in uranium enrichment and nuclear capabilities, coupled with limited IAEA access, intensifies international scrutiny. This fuels sanctions and diplomatic isolation, increasing uncertainty for foreign investors and complicating Iran's integration into global markets.
Foreign Direct Investment Surge
Mexico attracted $3.15 billion in new foreign direct investment in Q2 2025, a 246% increase year-over-year, driven by manufacturing and financial services sectors. The government's Plan México, including $540 million industrial hubs, aims to boost domestic and foreign investment, generating jobs and economic growth, enhancing Mexico's attractiveness as a regional investment destination.
Ukrainian Private Debt Resilience
Despite the severe impact of the Russian invasion in 2022, Ukrainian private sector debt, particularly in metals, mining, and agribusiness, has demonstrated remarkable resilience. Companies adapted by relocating operations, diversifying supply chains, and developing alternative export routes, sustaining production and servicing debt. This resilience underpins investor confidence amid ongoing conflict and economic uncertainty.
Gold's Rising Influence on CAD
Gold has emerged as a dominant driver of the Canadian dollar, surpassing oil and interest rates in influence. Canada's record trade surplus in gold and soaring bullion prices provide currency support amid economic contractions, signaling a shift in commodity dependence that investors and businesses must consider in risk assessments and currency exposure.
Capital Market Cooperation with China
Pakistan is strengthening financial sector linkages with China, aiming to diversify funding sources and attract institutional investment. Recent credit rating upgrades bolster investor confidence. Enhanced capital market cooperation can facilitate access to Chinese capital, support economic reforms, and deepen bilateral economic ties, benefiting Pakistan’s financial stability and growth prospects.
UN Sanctions Snapback and Economic Pressure
The imminent reimposition of UN sanctions, triggered by European powers, threatens to severely restrict Iran's oil exports and financial transactions, exacerbating economic challenges. These sanctions, combined with existing U.S. and EU penalties, are expected to reduce Iran's oil revenues significantly, constraining government spending and complicating international trade, thereby increasing country risk for investors and trading partners.
Geopolitical Tensions and Market Volatility
Ongoing conflicts, such as the Middle East tensions and Russia-Ukraine war, create short-term shocks in markets, particularly affecting energy prices and defense sectors. While markets often rebound quickly, these events inject uncertainty that influences investment strategies, commodity prices, and risk assessments in global supply chains.
Foreign Direct Investment from China
Chinese companies are increasingly shifting from exporting to establishing manufacturing operations in Indonesia, driven by policy shifts, supply chain diversification, and Indonesia's large domestic market. China is the third largest foreign investor with investments worth 121.6 trillion rupiah in 2024. This trend enhances Indonesia's role as a regional manufacturing hub and export base, supported by favorable tariffs and strategic sectors like renewable energy and semiconductors.
Political Instability Disrupts Supply Chains
Ukraine's conflict and broader geopolitical tensions have underscored how political instability and government changes disrupt global supply chains. Sudden policy reversals, tariffs, sanctions, and regulatory volatility create uncertainty in sourcing, production, and compliance. Businesses must adopt proactive legal and operational strategies to mitigate risks and maintain supply chain integrity in this unpredictable environment.
Financial Markets and Investor Confidence
Brazil's stock market reached record highs, supported by strong banking sector performance and expectations of monetary easing in 2026. The real showed resilience despite US trade tensions. Sovereign debt issuances in global markets indicate investor confidence in Brazil's economic management, aided by favorable risk spreads and integration with US capital markets.
Robust Foreign Direct Investment (FDI) Inflows
Vietnam attracted $24.09 billion in registered FDI in the first seven months of 2025, up 27.3% year-on-year, with manufacturing accounting for over half. The rise of ready-built factories accelerates project deployment, reducing costs and timelines. This surge reflects confidence in Vietnam’s stable policies and strategic position amid global supply chain shifts.
Geopolitical Instability and Political Risk Insurance Demand
Geopolitical tensions and economic uncertainties have led to substantial investment losses for UK businesses abroad. Interest in political risk insurance (PRI) has surged, mitigating losses from government interference, currency issues, and political violence. However, lack of awareness limits PRI uptake, highlighting a need for better risk management education among firms.
Stock Market Volatility and Foreign Investor Interest
Saudi Arabia's Tadawul stock index showed volatility with recent declines amid weak oil prices, yet foreign investors increased their market share, accounting for 41% of equities buying in late August 2025. Attractive valuations and reforms easing foreign ownership have made Saudi stocks appealing despite domestic institutional sell-offs and oil price uncertainties, signaling potential market recovery.
Decline in Industrial Investment
Canadian industrial investment has plummeted to historic lows since 2015, diverging sharply from US trends. Excessive regulation and lack of government ambition in resource transformation have eroded manufacturing capacity, risking Canada's relevance in global supply chains. Revitalizing investment requires tax competitiveness, regulatory reform, and clear resource development policies to sustain economic growth and trade competitiveness.
Public Spending and Social Welfare Pressures
France's high public spending, exceeding 57% of GDP, largely funds an extensive social welfare system including pensions, healthcare, and unemployment benefits. Rising social expenditures contribute significantly to the fiscal deficit and public debt, limiting fiscal flexibility. Attempts to reform or reduce these expenditures face strong political and public resistance, complicating deficit reduction efforts.
Banking Sector Resilience and Credit Upgrades
S&P Global Ratings upgraded credit ratings of major Vietnamese banks, reflecting improved asset quality, stable deposit funding, and supportive monetary policy with lowered interest rates. Non-performing loans declined, and regulatory reforms enhance governance. However, credit risks remain elevated due to high private sector credit-to-GDP ratios. The banking sector's resilience is critical for sustaining investment and economic growth.
Demographic Challenges and Domestic Consumption
Japan faces demographic headwinds with an aging population impacting labor markets and consumption patterns. Despite recent wage increases and modest household spending growth, inflation pressures and real wage stagnation constrain domestic demand. These factors affect sectors reliant on consumer spending and shape long-term economic growth prospects.
Canada-U.S. Economic Interdependence
Despite political tensions and tariff disputes, Canadian businesses and investors maintain strong economic ties with the U.S., investing heavily south of the border. This interdependence underscores the challenges of economic sovereignty and highlights the importance of U.S. market dynamics in shaping Canadian trade and investment strategies.
Rising Sovereign Debt and Fiscal Deficit
France's public debt is escalating, projected to reach 122% of GDP by 2030, making it the third most indebted Eurozone country. The fiscal deficit remains significantly above EU limits, driven by high public spending and social welfare commitments. This debt trajectory raises concerns about fiscal sustainability, increasing borrowing costs and pressuring government budgets amid political gridlock.
Currency Volatility and Exchange Rate Risks
The Pakistani Rupee has depreciated significantly, reaching approximately 280 PKR per USD, increasing import costs and inflationary pressures. Currency fluctuations affect trade competitiveness, remittances, and investment decisions. Businesses face challenges in hedging risks amid global economic pressures, impacting supply chains and cost structures.
Digital Trade Legislation Targets US Tech Firms
South Korea’s proposed digital platform laws are perceived as discriminatory against US technology companies, potentially straining bilateral trade relations. The legislation mirrors EU’s Digital Markets Act and may provoke US retaliatory tariffs or trade actions. This regulatory divergence risks complicating South Korea’s trade diplomacy and access to critical US markets.
South Korea-US Trade Tensions
Unresolved trade agreements between South Korea and the US create risks of new disputes, particularly over tariffs and investment terms. US concerns about trade imbalances and regulatory barriers may lead to additional demands. These tensions could disrupt bilateral trade flows, affect Korean exports, and complicate investment strategies, requiring careful diplomatic and economic management to maintain stable relations.
Political Instability and Market Impact
Recent political protests and the abrupt removal of Finance Minister Sri Mulyani Indrawati have unsettled investors, causing currency depreciation and stock market declines. Concerns over fiscal discipline and populist spending plans under President Prabowo Subianto have heightened economic uncertainty, potentially affecting foreign investment inflows and Indonesia's financial stability in the near term.
Political Instability and Market Impact
Government crackdowns on opposition parties and judicial interventions have triggered market volatility, including stock sell-offs and bond yield surges. Political risks undermine investor confidence, influencing capital flows, currency stability, and sovereign financing strategies.
Revised Growth and Inflation Forecasts
Turkey's government lowered 2025 GDP growth forecasts to 3.3% from 4%, prioritizing price stability over rapid expansion. Inflation projections were revised upward to 28.5% for 2025, reflecting persistent price pressures. The government aims for gradual monetary easing while managing fiscal deficits and reconstruction costs post-2023 earthquakes.
China's Strategic Pivot to Southeast Asia
Amid US trade tensions, China is redirecting exports to Southeast Asia and strengthening regional trade corridors with ASEAN. This pivot aims to mitigate US tariff impacts by leveraging lower-cost neighbors as transshipment hubs, reshaping regional supply chains and trade flows. However, it raises geopolitical concerns and may provoke retaliatory measures, affecting global trade stability and investment patterns.
Growth of Forex Trading and Regulation
Forex trading in South Africa has become mainstream, driven by rand volatility and increased retail participation. Regulatory tightening under the FSCA aims to protect investors and improve market integrity, presenting new opportunities and risks for traders, businesses, and financial institutions engaged in currency markets.