Mission Grey Daily Brief - July 13, 2025
Executive Summary
The last 24 hours have been marked by an escalation in global economic and geopolitical tension, with major developments shaping the business and political climate worldwide. President Trump's sudden announcement of sweeping new tariffs—targeting the European Union, Mexico, Canada, Brazil, and BRICS-aligned countries—has reignited fears of a prolonged global trade war. Simultaneously, geopolitical flashpoints are intensifying in Eastern Europe and the Middle East: Russia's large-scale missile and drone strikes on Ukraine prompted rare NATO air patrols near Poland's border, while post-ceasefire fallout continues to isolate Iran both economically and diplomatically. Markets are roiled, with volatility spiking in some regions as investors flee to safe-haven assets like gold. BRICS' rebuke of US trade aggression at their summit in Brazil and discussion of alternative financial structures further signals a shifting world order. Underlying all these trends is a deepening sense of global uncertainty, as the old guard of globalization faces mounting challenges from protectionist and authoritarian actors.
Analysis
Trump's Tariff Blitz and Global Trade Turbulence
President Trump's tariffs, which now include 30% duties on the EU and Mexico and a staggering 50% tariff on Brazilian goods, have sent shockwaves through international markets [Brazil’s B3 Sli...][World Economic ...][Global News Sum...][As Trump target...]. Nearly every major US trading partner is now facing penalty levies, either directly or as a blanket measure for those not striking bilateral trade deals with Washington. Brazil’s B3 stock index has endured five consecutive days of losses, closing down 0.41% at 136,187.31 points, and the Brazilian real has weakened, with capital flight intensifying as risk aversion takes hold [Brazil’s B3 Sli...].
Meanwhile, global equity indexes turned south, with the S&P 500 dropping 0.3% and European shares slipping by over 1% amid renewed trade war fears. Even Asian markets, though mixed, reflected this cautious mood. Safe-haven demand surged, pushing gold prices up more than 1% to $3,356.93 per ounce and spurring similar rallies in silver and other precious metals [Gold climbs on ...][Gold, silver pr...]. Oil, too, rose by over 2%—Brent crude closed at $70.36—amid concerns about tighter supplies and future sanctions regimes [Oil rises over ...].
This raft of tariffs is not just about economics: it signals a hardening posture from the US toward BRICS and non-aligned states, making clear that trade relationships are now deeply entangled with geopolitics. For businesses, the operational environment is entering a phase of radical uncertainty. Cross-border strategies, supply chains, and market forecasts must now be built around the unpredictability of government directives rather than the stability of multilateral rules. The threat of further escalation is real, and so is the risk of fragmentation of the global economy into rival camps with incompatible standards and networks.
BRICS, Global South, and the Fragmenting Order
Key to understanding this moment is the growing assertiveness of the BRICS coalition (Brazil, Russia, India, China, South Africa—now joined by Iran and Indonesia). At their summit in Rio, leaders not only condemned US tariff aggression but also called for reforms to institutions like the IMF and World Bank, and advanced plans for an alternative cross-border payments system—a direct challenge to the dominance of the SWIFT network [As Trump target...].
Trump's threat of a 10% blanket tariff on BRICS members and a targeted 32% tariff on all Indonesian goods, set to begin August 1, is a clear attempt to fracture this alignment through economic coercion. Yet, Indonesia and others are now weighing the costs of bandwagoning with the West against the potential of forging new ties within a multipolar global economy. US multinationals are seeking ways to buffer this risk: Chevron is reported to be considering renewed energy investments in Indonesia to counterbalance tariff shocks [As Trump target...].
The upshot is a world economy at an inflection point. If nations and businesses are forced into rival economic camps, investment flows, technological standards, and even payments infrastructure could diverge rapidly. The challenge for international businesses is to develop flexibly diversified strategies—and compliance systems—that anticipate abrupt new fault lines.
Europe and NATO: Rising Security Threats at the Eastern Flank
During the past day, Russia dramatically intensified its air assault on Ukraine, launching 26 missiles and almost 600 drones in strikes that killed at least 13 civilians and injured dozens [Russia launched...]. The attacks, targeting Lviv and other regions near NATO borders, prompted Poland to scramble combat aircraft and place its air defense systems on high alert, an exceedingly rare move for a NATO member in response to non-alliance-hostile activity [NATO Ally Scram...][Poland launches...]. This follows Romania’s announcement that it is seeking to acquire Iron Dome-style defenses against spillover from the war.
German and US officials in Rome—at the Ukraine Recovery Conference—pledged additional air defense support, highlighting a broader shift from “watchful support” to “active deterrence.” The scale of Russian bombardment and the spread of conflict pressure points—along with Russia’s increasingly close ties with North Korea—raise deep strategic risks for the European periphery [Moscow warns US...]. The prospect of escalation, whether by design or through miscalculation, remains significant.
Iran-Israel-US Triangle: The Ceasefire’s Aftershocks
Barely two weeks since the dramatic missile exchanges between Iran, Israel, and the US, the region remains acutely unstable. Iran’s Supreme Leader has warned of further strikes on US bases in the Gulf after a confirmed Iranian missile hit on the Al Udeid Air Base in Qatar, marking Tehran’s most direct attack on US military infrastructure in years [US ‘Admits’ Ira...][Iran warns of m...]. While a formal ceasefire holds, Iran is suffering deep internal unrest, new international sanctions, and an intensifying domestic crackdown—including the expulsion of hundreds of thousands of Afghan refugees and persecution of minorities [After 12 days o...].
Iran’s isolation is only matched by its defiance, leveraging both military threats and conditional diplomatic overtures to keep adversaries guessing. Businesses considering engagement with Iran face not only the thicket of US and EU sanctions but also acute risks from unpredictable escalation and the regime’s poor human rights record. The cost of compliance and the reputational and ethical risks inherent in any dealings with Russia or Iran are higher than ever.
Conclusions
The events of the past day crystallize a new era of uncertainty in the global economy and security order. Trade is no longer insulated from geopolitics; alliances are fraying and reforming; old certainties around global rulemaking and open markets are fading. For internationally-minded businesses and investors, the question is not whether to adapt—but how.
How will the global economy adjust to the prospect of durable bifurcation between competing economic and technological blocs? Will mounting security risks at NATO’s periphery lead to a dangerous accidental escalation? And are the world’s institutions—national, multilateral, and private—prepared for an era in which resilience, ethical awareness, and compliance matter just as much as cost and market access?
As the world watches, the need for forward-looking, agile strategy has never been greater—nor the risks of complacency more severe.
Further Reading:
Themes around the World:
Challenges in Megaprojects and Gigaprojects
Saudi Arabia’s ambitious megaprojects, including NEOM and Trojena, face delays and budgetary recalibrations amid lower oil revenues and fiscal deficits. These challenges affect timelines for global events and investment flows, prompting a reassessment of spending priorities. The outcome influences supply chain development, infrastructure investment, and the Kingdom’s ability to meet Vision 2030 targets.
Public Investment Fund (PIF) Strategic Shift
Saudi Arabia's PIF, managing over $900 billion, is recalibrating its domestic spending to encourage private sector investment. The fund is scaling back direct government project financing to seed value chains and clusters, fostering a more dynamic private sector. This strategic pivot aims to optimize capital allocation amid budget constraints and evolving economic priorities.
Fiscal Constraints and Economic Growth Challenges
Brazil faces significant fiscal pressures with a debt nearing 77.5% of GDP and proposed spending cuts of R$70 billion. Economic growth forecasts have been moderated to around 2.2% for 2025 amid inflation and external headwinds, constraining fiscal space and raising risks of investment flight if confidence in debt sustainability erodes.
Financial Market Visibility and Investor Sentiment
Inclusion of Pakistani banks and companies in MSCI Frontier Markets Indices signals improved market transparency and resilience, boosting investor visibility. However, stock market volatility driven by geopolitical tensions and weak corporate earnings reflects underlying economic fragility. Sustained policy predictability is essential to convert market optimism into tangible economic growth and capital formation.
Challenges in Gigaproject Delivery and Fiscal Discipline
Saudi Arabia faces challenges in delivering ambitious megaprojects like NEOM and Trojena, with delays and design revisions amid budget deficits. The government is recalibrating spending priorities, emphasizing fiscal discipline and private sector participation. These adjustments impact investor confidence and timelines for infrastructure critical to economic transformation and global event hosting.
Geopolitical De-risking Trends
Increasing Sino-US tensions drive investors and companies in Asia to diversify away from American exposure, seeking alternatives in the Middle East and Southeast Asia. This 'America plus 1' strategy reflects concerns over sanctions, tariffs, and geopolitical risks, potentially fragmenting global trade and investment flows, and increasing inflationary pressures over the medium term.
Middle Corridor Expansion and Regional Connectivity
Turkey is expanding its strategic role as a transport and trade hub through the Middle Corridor, enhancing rail connectivity with Iran, Iraq, Afghanistan, and Central Asia. New agreements and infrastructure investments aim to bypass traditional Russian routes, boosting regional integration, trade volumes, and Turkey's geoeconomic significance as a critical Eurasian transit nexus.
Slump in Greenfield Manufacturing Projects
India, along with other developing countries, faces a sharp decline in greenfield manufacturing projects, down 26%, due to high US tariffs, trade tensions, and geopolitical uncertainty. This slump affects supply-chain-intensive sectors like textiles and electronics, undermining manufacturing expansion and foreign investment inflows critical for industrial growth.
Iranian Companies Operating in Georgia for Sanctions Evasion
Thousands of Iranian companies are registered in Georgia, often at limited addresses, raising concerns about sanctions evasion and illicit financial flows. These entities engage in diverse sectors and may facilitate rebranding Iranian goods for export to Western markets, undermining sanctions effectiveness and complicating international trade compliance.
Credit Market and Corporate Bond Crisis
Widespread violations in Vietnam's corporate bond market, including misuse of proceeds and delayed payments, have triggered a sharp stock market decline and investor concerns over credit availability. This crisis threatens to constrain growth, undermine investor confidence, and complicate Vietnam's recent upgrade to emerging market status. Regulatory scrutiny and reforms are critical to restoring market integrity and supporting sustainable financial sector development.
Infrastructure Investment and Regulatory Barriers
Australia attracts significant global infrastructure capital, especially in renewables and data centers, driven by political stability. However, investor concerns over regulatory delays, environmental approvals, and labor costs impede project execution. Reforming planning and environmental legislation is critical to unlocking investment potential and sustaining infrastructure growth aligned with climate and economic goals.
Robust Economic Growth Targets
Vietnam aims for at least 10% annual economic growth over the next five years despite global trade uncertainties and US tariffs. This ambitious target underscores the government's focus on macroeconomic stability, inflation control, and public debt management. Achieving this growth will be challenging due to volatile global conditions and the need to strengthen domestic consumption, exports, and investment momentum.
Geopolitical and Diplomatic Influence via FII
The FII has evolved into a critical geoeconomic and diplomatic platform, hosting high-level discussions on regional stability and global crises. Saudi Arabia leverages this forum to mediate conflicts and attract investment, enhancing its geopolitical stature. This dual role influences international trade dynamics and investor perceptions, reinforcing Riyadh’s position as a nexus of economic and political decision-making.
Investment Flows Favoring the US
Major financial executives affirm the US will continue to attract the majority of global investment flows, citing its deep, liquid markets and innovation leadership, particularly in AI. Despite concerns over government debt and trade tensions, the US remains a preferred destination compared to Europe and Asia, influencing global capital allocation strategies.
Monetary Policy and Interest Rate Trends
Banxico has been gradually cutting interest rates, with the benchmark rate at 7.50% and expectations to fall below 7.00% by year-end. Lower rates reduce financing costs and can stimulate investment, but may also signal economic weakness, tempering investor enthusiasm. This dynamic influences capital flows, stock market performance, and corporate borrowing conditions in Mexico.
China's Economic Influence on Taiwan's Frontline Islands
China's potential economic integration plans targeting Taiwan's Kinmen islands raise sovereignty and security concerns. Infrastructure projects and economic leverage could erode Taiwan's jurisdiction, escalating cross-strait tensions and complicating regional stability, with implications for Taiwan's political autonomy and international relations.
Yen Depreciation and Currency Volatility
The Japanese yen is weakening against the US dollar amid BoJ's dovish stance and widening interest rate differentials. Currency moves sometimes deviate from fundamentals due to geopolitical factors and fiscal policy speculation. Yen depreciation benefits exporters but raises concerns about potential market intervention and trade tensions, affecting global supply chains and investment flows.
Diamond Industry Crisis and Trade Barriers
Israel's historic diamond sector faces an existential crisis due to US tariffs not extended to Israeli exports, unlike those from the EU, compounded by global competition and weak demand. The industry, vital for exports and employment, calls for government intervention including free trade zones to restore competitiveness and attract investment.
Slowing M&A Activity and Domestic Buyer Dominance
M&A deal volume in Brazil is declining from pandemic highs, reflecting cautious investor sentiment amid high interest rates and economic uncertainties. Domestic investors now dominate transactions, signaling a shift in market dynamics. Reduced foreign participation may limit capital inflows and cross-border strategic partnerships, affecting Brazil's integration into global value chains.
Local Investor Sentiment and Market Opportunities
Brazilian local investors have adopted a tactically pessimistic stance due to uncertainties around interest rate cuts, election outcomes, and corporate earnings. However, analysts view this as a temporary phase, presenting a potential buying opportunity ahead of anticipated catalysts such as monetary easing and political clarity, particularly favoring defensive sectors and commodities.
Foreign Direct Investment Expansion and Shift
FDI inflows reached $18.8 billion by September 2025, the highest in five years, with new registered capital up 15.2%. Notably, investment sources are diversifying beyond traditional partners to include the US and China, focusing on high-tech production, renewable energy, and industrial infrastructure, signaling Vietnam's evolving investment landscape and technological upgrading.
Water Scarcity as Financial Risk
Turkey faces increasing water scarcity due to population growth, reduced rainfall, and inefficient irrigation, impacting 25 of its 81 provinces with high water stress. This environmental challenge poses direct financial risks to food, energy, and manufacturing supply chains, influencing investment decisions and insurance systems, thereby affecting Turkey's economic stability and operational resilience.
Private Sector Investment Growth
Private sector investments in Egypt surged by 73% in the last fiscal year, driven by manufacturing, tourism, and IT sectors. This growth reflects renewed investor confidence, improved fiscal indicators, and successful economic reforms, contributing to a 4.4% GDP growth rate and signaling Egypt's emergence as a leading investment hub in the region.
High Energy Costs and Industrial Competitiveness
Pakistan’s industrial sector suffers from electricity tariffs nearly double those of regional competitors, driven by costly capacity payments to Independent Power Producers. These inflated energy costs erode export competitiveness, increase production expenses, and discourage manufacturing expansion, necessitating urgent reforms in energy contracts and investment in renewables and hydroelectric power.
Strategic Rare Earth Element Reserves
Turkey's significant rare earth element reserves in Eskişehir Beylikova have attracted international attention amid China's export restrictions, risking $150 billion in global production losses. These elements are critical for defense, renewable energy, and high-tech industries. Turkey's development of these resources could position it as a vital alternative supplier, attracting investment and reshaping global supply chains.
Canada's Export Diversification Strategy
Prime Minister Mark Carney emphasizes reducing economic dependence on the U.S. by doubling exports to non-U.S. markets, particularly in natural gas and critical minerals. This strategic pivot aims to mitigate risks from U.S. tariffs and trade policies, fostering new trade partnerships in Asia and beyond to enhance economic resilience.
Baht Currency Volatility and Export Competitiveness
The Thai baht has appreciated by over 8% in 2025, weakening export competitiveness and tourism appeal. Business sectors urge the Bank of Thailand to manage the baht within 34-35 per US dollar to support exports. Factors influencing the baht include gold price surges and possible illicit financial flows, complicating monetary policy responses.
Canadian Federal Budget and Fiscal Policy
Prime Minister Mark Carney's first federal budget signals a shift toward expansive fiscal policy with significant deficits to support infrastructure, defense, and clean energy projects. This approach aims to counteract monetary policy limits and structural economic challenges, influencing investor confidence and long-term economic growth prospects.
Manufacturing Sector Growth and Export Challenges
Indonesia’s manufacturing industry grew 4.94% with a 17.24% GDP contribution, driven by domestic demand and investment. However, export values lag behind regional peers due to a focus on the domestic market. This presents both opportunities for import substitution and challenges in enhancing global competitiveness amid shifting supply chains.
Garment Industry Recovery and Challenges
Vietnam's textile and garment sector rebounded with 7.7% export growth in early 2025, moving towards higher value-added products and new markets like the Middle East. Nonetheless, high production and logistics costs, reliance on imported raw materials, and US tariff impositions challenge competitiveness. The sector is adopting automation and green technologies but requires stronger financial and supply chain support to sustain growth.
Equity Market Volatility and Outlook
Indian equity markets experienced high volatility in 2025 due to global uncertainties, muted earnings, and geopolitical tensions. Despite this, key indices showed modest gains supported by strong corporate earnings, tax reforms, and expectations of easing US tariffs. Market breadth and fundamentals suggest potential for recovery, though liquidity risks and geopolitical factors remain concerns.
Trade Negotiations and US Relations
Progress in US-Mexico trade talks amid ongoing tensions is critical for maintaining tariff suspensions and supply chain stability. The extension of tariff pauses and negotiations under the USMCA framework influence bilateral trade flows, market access, and investor sentiment. However, uncertainties around US trade policies and political dynamics continue to pose risks to Mexico's export-driven economy and nearshoring strategies.
UK Businesses Leading in Risk Management
British firms demonstrate advanced risk oversight with high board involvement and dedicated risk departments. Emphasis on cyber security, economic slowdown, and emerging risks like AI positions UK businesses to better anticipate disruptions. This proactive stance enhances resilience but requires ongoing investment in risk analytics and insurance solutions.
Regulatory and Bureaucratic Burdens
Excessive regulation and bureaucratic complexity in Germany stifle innovation and investment. High compliance costs, lengthy approval processes, and administrative inefficiencies divert resources from productive activities. These factors contribute to Germany's status as one of the most expensive OECD business locations, deterring investors and impeding economic recovery and growth.
Robust Export Growth Amid Challenges
Vietnam's exports surged over 16% year-on-year to $368 billion by mid-October 2025, driven by electronics manufacturing and mining. Despite a recent slowdown due to US tariff hikes and global trade barriers, exports remain on track for double-digit growth. However, rising protectionism, geopolitical tensions, and sustainability requirements pose ongoing risks to trade dynamics and supply chains.
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.