US tariff and trade risk

Vietnam’s export-led model faces heightened exposure to US tariff negotiations, market-economy status disputes and transshipment scrutiny. With large bilateral surpluses and manufacturing concentration in electronics and consumer goods, firms should prepare for compliance tightening, margin pressure and supply-chain reconfiguration.

Managed Trade Over Liberalization

US trade policy toward strategic rivals is shifting from broad liberalization toward managed trade, using tariffs, purchase commitments, and supply assurances such as rare earth flows. International firms should expect more politically negotiated market access and less predictable rules-based trade conditions.

Political Fragility Shapes Policy

Prime Minister Netanyahu’s coalition dynamics and expected election pressures are reinforcing policy volatility, especially on security, budgets, and negotiations. Investors should expect abrupt shifts in regulatory priorities, public spending, and geopolitical decision-making that affect market sentiment and long-term project planning.

Diaspora Flows Supporting Stability

Remittances and overseas investor channels remain important stabilizers, with RDA inflows reaching $12.74 billion and 62% invested in certificates. New riyal and dirham products may support inflows, but dependence on Gulf-linked workers and capital still creates concentration risk.

Tight money, fragile lira

Turkey’s disinflation program remains under pressure from geopolitical shocks and domestic politics, with inflation still above 32%, high bond yields around 36.89%, and potential for further rate tightening that raises financing costs, working-capital strain, and hedging needs.

Labor Shortages and Migration Limits

With nearly one-third of the population over 65 and fertility down to 1.1 in 2024, labor scarcity is deepening. Yet tighter permanent residency rules and sector caps on foreign workers risk constraining hiring, raising wages, and reducing operating flexibility for labor-intensive industries.

Russian Fuel Sanctions Flexibility

London’s temporary easing of sanctions on Russian-derived jet fuel, diesel, and some LNG highlights pragmatic supply-security priorities. The move may stabilize aviation and fuel-intensive sectors, but it also increases policy unpredictability, compliance complexity, and reputational scrutiny for firms managing sanctions-sensitive supply chains.

Militant Threats in Balochistan

Escalating insurgent violence in Balochistan is raising risks for mining, transport and project execution. Recent attack surges, threats against foreign companies and weak border security heighten insurance, logistics and personnel protection costs, especially for projects tied to minerals and infrastructure.

Logistics Concessions Drive Efficiency

Brazil is advancing major transport concessions, including a proposed 30-year renewal of the Ferrovia Centro-Atlântica with R$27.6 billion in investment. Upgrades to rail, urban crossings and corridor access could improve commodity flows, but approvals and re-tendering still carry execution and regulatory risk.

Political System Uncertainty Persists

Debate over entrenched post-coup power structures and constitution drafting is reinforcing perceptions of institutional uncertainty. For investors, this raises concerns over policy continuity, reform credibility, and the pace of regulatory change, even without an immediate threat to operational stability.

Reconstruction and Aid Access Uncertainty

Gaza reconstruction remains blocked by disputes over disarmament, governance and Israeli withdrawal, while aid flows remain constrained. This delays donor-backed projects, construction demand normalization and cross-border commercial recovery, while keeping humanitarian scrutiny high for firms with regional operations or counterparties.

Rupiah Weakness and Tighter Rates

The rupiah has traded near Rp17,700 per US dollar, prompting Bank Indonesia to raise rates 50 basis points to 5.25%. Higher funding costs, FX volatility and a wider current-account deficit increase hedging needs and pressure importers, leveraged firms and investment planning.

Sanctions Pressure on Energy Exports

Western sanctions and shifting waiver rules continue to disrupt Russian oil trade, shipping and payments. Despite resilient flows to China and India, compliance risks, shadow-fleet exposure, and infrastructure attacks complicate export logistics, pricing, insurance, and long-term energy investment decisions.

China Competition Reshapes Industry

Chinese overcapacity is intensifying pressure on Germany’s autos, machinery, chemicals, and steel sectors. Recent analysis says Germany has already lost about 400,000 jobs, while export losses tied largely to China amount to roughly 3% of GDP.

Fiscal Strain and Policy Risk

France faces persistent budget stress, with the European Commission expecting debt above 120% of GDP by 2027 and deficits at 5.1%-5.7%. This raises tax, spending-cut and reform risks affecting corporate costs, public contracts and investor confidence.

Security spillovers from Syria

Turkey’s active role in Syria’s transition, reconstruction, and counterterrorism may create future contracting, logistics, and border-trade opportunities. However, PKK-related tensions, fragile governance, and possible cross-border instability still pose material risks to transport corridors and operations.

Persistent Technology Control Frictions

Semiconductor and advanced technology tensions remain unresolved despite summit diplomacy. Unclear status of Chinese probes into Nvidia and Qualcomm, combined with continuing US chip restrictions, sustains regulatory ambiguity, complicating market access, compliance planning, and cross-border technology investment decisions.

Labor And Capacity Pressures

To address shortages, Taiwan approved 1,699 manufacturers by April under a scheme granting more migrant-worker quotas when local wages rise by NT$2,000. The policy helps expand capacity, especially in high-tech manufacturing, but signals persistent labor tightness and higher operating costs.

Coalition Politics and Reform Continuity

Ramaphosa’s reform agenda remains active, but impeachment pressure, coalition instability, and uncertainty over new local coalition rules create policy execution risk. Investors should watch whether economic reforms in logistics, visas, and governance outlast current political leadership and municipal volatility.

Security Tensions Affecting Trade

Security and anti-cartel cooperation have become intertwined with trade talks as Washington links market access to law-enforcement collaboration. Bilateral friction over corruption allegations and sovereignty concerns raises political risk, complicates negotiations and clouds the operating environment for exporters and investors.

US-China tech controls squeeze Korea

South Korean chipmakers face a strategic squeeze between US export controls and Chinese demand. Exports to China rose 62.5% year on year in April, but any easing of equipment restrictions could help Chinese competitors narrow technology gaps in memory and logic chips.

Tariff Volatility and Trade Frictions

Trade conditions remain fluid as India navigates U.S. tariff investigations, temporary blanket duties and WTO disputes with China over IT and solar measures. Businesses face uncertainty over landed costs, compliance obligations and the durability of industrial-policy protections in strategic sectors.

Policy Volatility Clouds Planning

Rapid shifts across tariffs, trade investigations, refund litigation, and sector-specific exemptions are making US commercial policy less predictable. Companies face greater difficulty in budgeting, contract design, inventory planning, and long-term investment decisions as regulatory and legal outcomes remain fluid through mid-2026.

CUSMA Review and Tariffs

Canada faces major uncertainty ahead of the July 1 CUSMA review as Washington keeps tariffs on steel, aluminum, autos and forestry. With roughly $1.3 trillion in annual North American trade covered, prolonged negotiations could disrupt investment planning and cross-border supply chains.

Semiconductor and Strategic Industry Push

Export growth linked to AI and strategic industry policy is supporting Japan’s economy, while domestic chip and advanced manufacturing initiatives strengthen investment appeal. For multinationals, Japan offers subsidized high-tech capacity, but policy-linked competition for talent, power, and specialized suppliers is intensifying.

Fiscal-Credit Mix Raises Risk

Directed credit reached 43.1% of total lending in March, the highest since 2019, as subsidized programs expanded across housing, agriculture and industry. Markets warn fiscal, credit and parafiscal stimulus may keep rates higher for longer, complicating debt sustainability and capital allocation decisions.

Currency Transparency Commitments

Vietnam and the US Treasury have reaffirmed obligations not to use exchange rates for competitive advantage. The State Bank of Vietnam will begin publishing intervention and reserves-related data from 2027, reducing one friction point in bilateral trade while increasing scrutiny of macroeconomic policy management.

Large-Scale Infrastructure Investment Drive

Pretoria has announced a three-year R1 trillion infrastructure push across energy, water, logistics and IT to attract investment and create jobs. If implemented effectively, it could improve market access and industrial capacity, though execution risk remains high given corruption and institutional weakness.

Automotive and Metals Exposure

Autos, auto parts, steel, and aluminum sit at the center of bilateral talks, with U.S. tariffs on steel and aluminum at 50% and automotive exports already under pressure. These sectors are critical for Mexico’s export model, industrial employment, and supplier investment pipelines.

Suez Canal Revenue Shock

Red Sea and wider regional shipping disruptions have cut Egypt’s Suez Canal transit income by more than $10 billion, worsening foreign-exchange shortages, debt servicing pressure, import financing constraints, and logistics uncertainty for firms routing cargo through or near Egyptian trade corridors.

Defense Industry Expansion Opportunities

Ukraine’s defense-industrial capacity has risen from roughly $1 billion in 2021 to as much as $55 billion annually, with partner-backed models channeling about $3 billion since 2024. This creates opportunities in manufacturing, localization, components, dual-use technology and cross-border industrial partnerships.

Nearshoring Gains Face Frictions

Mexico still benefits from strong U.S.-linked nearshoring flows, including first-quarter FDI supported by U.S. capital, but logistics, policy uncertainty and trade frictions are limiting upside. Companies must weigh manufacturing advantages against infrastructure, regulatory and geopolitical execution risks.

Balochistan Security and Project Risk

Escalating insurgent violence in Balochistan is raising operational and security costs for mining, logistics and infrastructure projects. Recent attack surges and explicit threats to foreign companies heighten risks around Gwadar, Reko Diq, transport corridors and staff mobility.

Payment Channels Shift Eastward

Russia has largely redirected trade settlement into yuan and rubles, reducing exposure to Western financial infrastructure but increasing dependence on Chinese banks. Payment delays, secondary-sanctions fears, and limited convertibility complicate cross-border transactions, treasury operations, and counterparty risk management.

AI Supply Chain Expansion

NVIDIA said annual spending in Taiwan could rise from roughly $100 billion to $150 billion, while AMD announced over $10 billion for Taiwan’s ecosystem. This reinforces Taiwan’s centrality in AI chips, packaging, servers, and systems, attracting investment but tightening capacity.

Housing Supply Shortfall Constrains Operations

Australia remains well short of its 1.2 million-home target, with estimates of a 220,000-home gap and vacancy rates near 1.5%. Persistent housing scarcity raises labour costs, complicates workforce attraction and increases pressure on project delivery in major business centres.