Mission Grey Daily Brief - September 07, 2025
Executive Summary
The past 24 hours have seen a wave of geopolitical and economic ripples with global implications—many set in motion by the accelerating trade and currency realignments following the latest US tariffs, intensifying multipolarity in the world order. The most significant developments are the emergent unity and resilience within the BRICS+ alliance in defiance of new US tariffs, a hardening Russia-China-India economic axis, and increased regionalization of currency and trade. India and China, long wary rivals, are showing signs of a strategic thaw under external pressure, while Mexico is capitalizing on the shift in global supply chains. Simultaneously, the US dollar’s role as the world’s reserve currency faces mounting—though gradual—challenges from dedollarization efforts and alternative payment systems, even as the practical hurdles and internal BRICS divisions ensure the greenback’s dominance for now. These shifts are reshaping investment, energy, and supply chain strategies for international businesses and investors alike.
Analysis
1. Trump Tariffs Backfire: BRICS+ Unites in Multipolar Defiance
The headline event of the week—the US escalation of tariffs, particularly a 50% levy on India over its Russian oil trade, and similar measures against China, Brazil, and South Africa—was intended to isolate those economies and pressure Russia via its partners. Instead, these punitive moves are accelerating exactly what Washington hoped to prevent: a strengthening and realignment of BRICS+ nations, now openly seeking alternatives to the dollar, deepening trade and financial ties, and responding to pressure with new diplomatic platforms for collaboration. Narratives from India and China confirm that US “maximum pressure” diplomacy is driving Asia’s giants together, overcoming historical grievances to present a unified economic front ([1][2]).
At this week’s Shanghai Cooperation Organization summit in Tianjin, Indian Prime Minister Modi and Chinese President Xi Jinping stood alongside Vladimir Putin, signaling the emergence of a “multipolar” world in which the G7 is no longer the sole forum for global agenda-setting. Recent agreements between China and India on direct flights, trade facilitation, and reduced border tensions provide real substance to the new axis beyond diplomatic spectacle ([1][3]). Trade within the core BRICS nations expanded by more than 30% in 2025, despite—or perhaps because of—US pressure.
This axis is finding resonance well beyond Asia. Leaders of Global South nations are increasingly signaling opposition to Western domination, not only through economic and security alignments such as BRICS and the SCO, but also via independent resource and currency policies. The shift is not yet a monolithic bloc, but the pace of practical coordination is unmistakable, from energy and rare earths to parallel payment systems and local currency settlements ([4][5]).
2. Currency Fragmentation and the Drive for De-Dollarization
The BRICS currency project, while not yet materializing as a single currency, is gaining strategic coherence. The group is now actively promoting local currency settlements, the BRICS Pay and CIPS payment networks, and even basket-backed “synthetic” units of account loosely inspired by the IMF’s Special Drawing Rights ([6][5]). India's rupee and China's renminbi are both rising in stature for cross-border deals, though capital controls, convertibility issues, and political divisions still hinder global acceptance or immediate dethronement of the dollar.
The dollar remains the world’s de facto reserve currency—anchoring 58% of reserves and 88% of SWIFT transactions ([4]). However, the mechanics of reserve management are evolving: Russia and China are increasing gold reserves, and the share of US dollar assets in official reserves has dropped steadily. In 2023, about 20% of Russia’s trade was settled in non-dollar currencies, and this figure is climbing ([4][5]). De-dollarization is being used tactically as a bulwark against future US sanctions and tariff weaponization, and is likely to gain further traction if US monetary or geopolitical policy continues along its current course.
What’s striking is the parallel development of alternative financial infrastructure—BRICS Pay, CIPS, the New Development Bank, and experimentations in partial gold-backing, especially for commodity trade ([4][6]). While none rivals the Western system yet, the real risk for businesses is increasing fragmentation and compliance complexity in global trade, plus rising transaction/hedging costs as multipolar currency blocs take shape.
3. The India-China-Russia Economic Axis and a Resilient Global South
The US campaign against Indian energy imports from Russia—using tariffs and secondary sanctions—has backfired spectacularly from a US policy perspective. India remains the largest buyer of Russian seaborne crude (importing 1.6 million barrels per day in August, 37% of its total crude imports, up from 33% in July) and is explicitly prioritizing its own economic interests. Indian officials have also defended their growing re-export of refined fuels to Europe and the US, painting US policies as unfair and “profiteering” narratives as double standards ([7][8][9]).
The trilateral economic thaw is highlighted by India’s diversification of export markets, increased intra-BRICS trade (up 28% in 2025), and strategic realignment with China. A recent Beijing summit saw Modi and Xi project a new phase of pragmatic, if cautious, cooperation. For now, tensions linger—particularly over border disputes and competition for “Global South” leadership—but India’s adaptable posture and the region’s prioritization of economic autonomy diminish the risk of outright fissure ([2][1][3]).
4. Nearshoring and Mexico’s Rising Star
Amid global realignments, Mexico is benefiting handsomely from US-China decoupling and tariff wars. The Mexican stock market hit a new historic record above 60,000 points, up over 20% this year, driven by robust foreign capital flows, nearshoring investment, and resilient consumption sectors ([10]). The country’s nearshoring boom is being reinforced by strategic national efforts such as the CCE campaign to position itself as a global investment destination, aiming to double FDI inflows to $70 billion in the coming decade ([11]).
Industrial real estate investments—projected at $4 billion for 2025—demonstrate persistent business confidence, despite lingering legal, transparency, and security challenges ([12]). Mexico’s government and private sector are coordinating to leverage labor, trade access, and demographic advantages. At the same time, Mexico’s industrial and infrastructure ties with Brazil signal that the Latin American giants are seeking deeper alternatives to trade frameworks dominated by the US and China, further reinforcing the global trend toward regional blocks ([13]).
Conclusions
The world’s economic and geopolitical landscape is fragmenting with remarkable speed, driven by unpredictable US trade moves, China’s diplomatic maneuvers, and the collective agency of major emerging economies. US tariffs and secondary sanctions are not weakening the BRICS+ group but accelerating its drive for independence, currency innovation, and new financial infrastructure. India, China, and Russia are finding pragmatic ways to bury old rivalries—at least for now—in pursuit of autonomy and resilience. Alternative payment networks, gold accumulation, and cross-border currency deals may not dethrone the dollar this year, but they will raise transaction complexity and long-term political risk for international businesses.
Mexico’s ongoing investment surge, with its unique access to both Americas and robust nearshoring prospects, stands out as a case study of how policy shifts can create winners even amid global instability. Meanwhile, the “Global South” and regional frameworks continue to gain influence, challenging the complacency of historically dominant powers and offering businesses alternative routes for investment, supply chains, and partnerships.
As you reflect on today’s brief, consider:
- How might the steady carving of alternative payment and trade networks reshape your risk calculus for global operations?
- Are you, as investors and business leaders, prepared for a world where political shocks drive supply chain and financial fragmentation to the local or regional level?
- And crucially, how can you use your own agility and values-based strategy to thrive in an era where alignment with democratic, transparent, and predictable business environments is both a competitive differentiator and a shield against the rising tide of transactional diplomacy?
Mission Grey Advisor AI will continue to track these seismic shifts and support your business in navigating a world of multiplying risks—and opportunities.
Further Reading:
Themes around the World:
Border Trade Disruptions with Afghanistan
Frequent closures at key border points like Torkham severely impact bilateral trade, stranding thousands of trucks and causing multi-million dollar losses. This disrupts supply chains for essential goods, undermines local economies, and threatens the transport and customs sectors critical for regional commerce.
Supply Chain Resilience and Localization Efforts
Vietnam faces vulnerabilities due to high dependence on imported raw materials, with up to 60% in sectors like food processing sourced overseas. To enhance supply chain resilience, businesses are encouraged to adopt circular production, green technologies, and build localization alliances linking firms, research institutions, and universities. These efforts aim to raise domestic content to 50% by 2030, strengthening Vietnam’s autonomous manufacturing base and global supply chain integration.
Fiscal Expansion and Industrial Strategy
Takaichi advocates for increased public spending focused on strategic industries such as semiconductors, defense, and advanced manufacturing. This industrial revival aligns with global trends emphasizing economic security and technological sovereignty, potentially reshaping Japan's supply chains and attracting foreign direct investment in high-value sectors.
Political Instability and Coalition Collapse
The unexpected withdrawal of Komeito from the ruling coalition with the Liberal Democratic Party (LDP) following Sanae Takaichi's election as LDP leader has created significant political uncertainty. This destabilizes governance, complicates policy-making, and raises the risk of snap elections, impacting investor confidence and potentially disrupting Japan's economic and fiscal strategies.
Sanctions and Shadow Logistics
Western sanctions have forced Russia to develop alternative supply routes and exploit a 'grey market' for imports and exports. This 'shadow logistics' includes the use of 'phantom fleets' to circumvent restrictions, reshaping global trade geography. Businesses face increased complexity and risk in supply chain management involving Russia due to these covert adaptations.
Renewable Energy Market Growth
Mexico's wind energy sector is rapidly expanding, driven by government commitments to clean energy and carbon reduction targets. Favorable wind conditions and energy reforms attract private investment, despite regulatory and grid challenges. This growth presents opportunities for foreign investors and supply chain diversification, aligning with global sustainability trends and energy security priorities.
Taiwan's Energy Security Risks
Taiwan's heavy reliance on imported energy, especially LNG (97% by sea), exposes it to significant risks amid Chinese military threats and potential blockades. This vulnerability threatens critical industries like semiconductors, prompting Taiwan and the U.S. to bolster energy storage, reconsider energy mixes, and support LNG shipments to ensure uninterrupted supply and economic stability.
International Law and Diplomatic Isolation
Israel faces growing diplomatic isolation driven by international legal scrutiny over its actions in Gaza. This has led to arms export restrictions by some European countries and increased reputational risks, affecting defense supply chains and international cooperation. The cumulative impact of legal and normative pressures shapes Israel's geopolitical and economic environment.
UK-Germany Trade Relations and Investment Optimism
Recent surveys indicate improving sentiment among German companies towards UK trade relations post-Brexit, with expectations of increased turnover and investment. Enhanced bilateral cooperation in security and defense, alongside calls for trade facilitation, signal opportunities for growth in future-oriented industries, though cautious optimism remains due to lingering regulatory and geopolitical uncertainties.
Thriving Informal Economy
An estimated $68 billion informal economy, fueled by smuggling, counterfeiting, and tax evasion, undermines formal businesses and shrinks the tax base. This distorts market competition, reduces government revenues, and complicates efforts to implement consistent economic policies, thereby exacerbating fiscal challenges and investor wariness.
Textile Industry Crisis
Turkey's textile and ready-to-wear sectors face severe challenges from high inflation, rising production costs, and government policy gaps, leading to factory closures and production shifts abroad. This threatens a historically vital export sector, risking job losses and reduced foreign exchange earnings, with implications for Turkey's industrial base and trade balance.
Supply Chain Diversification and 'China Plus One'
In response to geopolitical risks and trade tensions, companies increasingly adopt 'China plus one' strategies, relocating manufacturing to Southeast Asia and other regions. This shift aims to mitigate dependency on China, reshape regional trade balances, and alter global logistics networks, potentially diminishing China's dominance in low-cost manufacturing over the long term.
Currency Depreciation and Financial Stability
Ukraine's hryvnia is projected to weaken to a five-year low due to delayed international financial aid and increased government spending amid economic contraction. Currency depreciation exacerbates inflationary pressures, complicates debt servicing, and undermines financial stability, posing challenges for foreign investors and domestic economic recovery.
China's Economic Slowdown
China's GDP growth deceleration to around 4.7-4.8% in Q3 2025 signals weakening domestic demand, deflationary pressures, and property sector distress. This slowdown threatens global commodity demand, dampens investor confidence, and forces Beijing to balance stimulus measures with financial stability concerns, influencing global economic growth projections and investment strategies.
Energy Crisis Impact on German Industry
Germany's industrial sector faces severe strain from soaring energy costs and potential gas supply disruptions due to geopolitical tensions with Russia. Heavy industry, reliant on Russian gas, risks production cuts and job losses, threatening economic recovery. The crisis pressures firms to consider relocating production abroad, highlighting vulnerabilities in Germany's energy dependency and industrial competitiveness.
Manufacturing Sector Stability
Vietnam's manufacturing PMI remained steady at 50.4 in September 2025, indicating sustained sector health. Despite muted international demand and inflationary pressures, production and new orders are growing modestly. The sector faces challenges from input cost inflation and supply chain disruptions but benefits from supportive public investment and stable economic policies.
Defense and Industrial Collaboration Expansion
The US-Australia critical minerals agreement includes enhanced defense cooperation, with investments in advanced manufacturing and defense technologies such as missile systems and underwater vehicles. This collaboration strengthens the AUKUS alliance and integrates critical mineral supply security with national defense strategies.
Banking Sector Credit and Funding Dynamics
Credit demand in Saudi Arabia's banking sector outpaces deposit growth, pushing loan-to-deposit ratios above 100%. Banks increasingly rely on capital market issuances and syndicated loans, including foreign funding, to meet financing needs. Regulatory measures like countercyclical capital buffers are being introduced to mitigate risks amid rapid credit expansion linked to Vision 2030 projects.
Economic Resilience Amid Conflict
Despite prolonged conflict, Israel's economy demonstrates remarkable resilience with low unemployment, manageable budget deficits, and strong tech-driven growth. This stability underpins investor confidence and supports sustained business operations, though ongoing security risks necessitate contingency planning for supply chain disruptions and market volatility.
Digital Currency Acceleration Due to Conflict
The Russia-Ukraine war is accelerating interest in digital currencies as alternative tools for international transactions, bypassing traditional financial systems affected by sanctions. Asset managers like BlackRock are studying stablecoins and digital payments, signaling a potential shift in global financial infrastructure with implications for cross-border trade and capital flows involving Russia.
High-Speed Rail Debt and Financing Risks
Indonesia's Jakarta-Bandung high-speed rail project faces significant financial challenges, with costs escalating from $5.5 billion to $7.27 billion. The debt burden, primarily financed by Chinese loans, is being shifted to Danantara, a state-owned investment agency. This raises concerns about fiscal exposure, project viability, and Indonesia's growing dependence on Chinese financing under the Belt and Road Initiative.
Labor Market Challenges and Employment Data Issues
The UK labor market shows signs of softness with rising unemployment and subdued hiring activity. Compounding this, concerns over the quality and reliability of official employment data hinder effective policymaking and market confidence. Recruitment firms report declines in fees, reflecting broader economic caution and impacting workforce planning across industries.
Declining R&D and Innovation Investment
Australia's long-term growth prospects are challenged by a sustained decline in research and development spending, now below OECD averages. This innovation deficit risks eroding competitiveness and productivity, potentially driving capital and talent offshore. Addressing this requires policy reforms and increased business investment to sustain economic dynamism and attract global investors.
Weak German Economic Sentiment and Inflation
German economic sentiment showed slight improvement in late 2025 but remains fragile amid accelerating inflation, especially in services. Export challenges persist due to geopolitical tensions and unfavorable exchange rates, with significant declines in shipments to the US. Rising costs and subdued demand constrain recovery prospects, underscoring ongoing vulnerabilities in Germany's export-driven economy.
Currency Volatility and Central Bank Interventions
The Russian ruble shows mixed dynamics, supported by rising oil prices and central bank interventions, but pressured by a strong US dollar and geopolitical uncertainty. Currency fluctuations impact import costs, export competitiveness, and financial market stability, posing challenges for multinational companies operating in or trading with Russia.
Military Preparedness and Budget Constraints
Israeli military officials warn of inadequate preparedness for multi-front conflicts without urgent budget increases. Weapons shortages and expanding threats from Iran, Hezbollah, and Turkey necessitate enhanced defense spending and long-term manufacturing of advanced systems, impacting national security and defense-related economic sectors.
Sharp Decline in Sovereign Default Risk
Pakistan has achieved a remarkable reduction in sovereign default risk, improving by approximately 2,200 basis points between June 2024 and September 2025. This improvement, recognized globally, reflects successful macroeconomic stabilization, adherence to IMF programs, timely debt servicing, and structural reforms, enhancing Pakistan’s creditworthiness and attractiveness to investors.
Agribusiness Environmental Scrutiny
Brazil's agribusiness, the largest greenhouse gas emitter and a key economic sector, faces increasing global scrutiny ahead of COP30. Despite efforts to showcase sustainable practices, the sector's role in deforestation and environmental impact poses risks to exports and international trade relations, especially with the EU and US imposing stricter environmental compliance requirements.
Stock Market Risks and Opportunities
Indian stock markets are poised for growth driven by earnings recovery, tax reforms, and trade negotiations. However, risks such as US tariffs, liquidity constraints, and delayed earnings recovery could impact investor sentiment. Market participants are advised to cautiously build positions anticipating a medium-term uptrend.
Geopolitical Tensions and Global Trade Risks
Rising US-China trade tensions and rare earth export restrictions create a risk-off environment impacting UK markets. The UK’s strategic positioning between the EU and global powers requires careful navigation of geopolitical risks. These tensions may disrupt supply chains, increase costs, and introduce volatility in trade and investment flows affecting UK businesses.
Financial System Stability Amid Risks
Despite asset price inflation and market volatility, Japan's financial system remains stable with strong bank capital and funding. However, rising real estate prices and increased exposure to risky assets warrant vigilance. The Bank of Japan's cautious approach to monetary normalization reflects the need to balance growth with financial stability risks.
Manufacturing Sector Growth Amid Export Challenges
Indonesia's manufacturing industry grew 4.94%, contributing over 17% to GDP and employing millions. However, export performance lags behind regional peers due to weak foreign demand, despite strong domestic consumption. This highlights the sector's resilience but also underscores the need for enhanced competitiveness and export diversification.
Economic Uncertainty and Business Sentiment
Surveys indicate increasing pessimism among Canadian firms, with a growing share preparing for recession. Cost pressures, tariffs, and slowing demand constrain hiring and capital expenditure, dampening economic growth prospects. This cautious business outlook affects supply chain decisions, investment strategies, and overall market confidence in Canada.
Industrial Activity and Investment Slowdown
Mexico faces a contraction in industrial output and weak public and private investment, with manufacturing and construction sectors declining in late 2025. This slowdown challenges the government's Plan Mexico economic strategy, threatening job creation and nearshoring benefits. Businesses should anticipate subdued industrial demand and potential delays in infrastructure projects, impacting supply chains and investment returns.
Agricultural Expansion Amid Sustainability Scrutiny
Brazil's agribusiness sector plans record planting for 2025/26, reinforcing its role as a global food supplier. However, the sector faces international scrutiny over deforestation and greenhouse gas emissions, with regulatory pressures from the EU and US. This dynamic influences export market access, sustainability compliance costs, and Brazil's global trade reputation.
Internal Political Infighting and Governance Strains
Political rivalries within Iran's ruling elite intensify amid economic hardship and sanctions pressure. This infighting hampers coherent policy responses, undermines reform efforts, and fuels public discontent, thereby increasing country risk for investors and complicating long-term economic planning.