Tax collection through utility bills

Authorities collected Rs476 billion in FY2026 taxes through electricity bills, including Rs351 billion sales tax and Rs124 billion income tax. This raises costs for formal businesses and compliant consumers, reinforcing pressure on margins, weakening competitiveness, and complicating cash-flow management for commercial operators.

Trade diversification beyond major powers

Indonesia is actively broadening market access through BRICS engagement and a proposed preferential trade agreement with Mercosur after broader CEPA talks stalled. This supports export diversification beyond the US and China and may open new channels for manufactured goods and agribusiness trade.

Defense Supply Chain Decoupling

A July 20 executive order bars U.S. defense contractors from buying critical minerals from China, while related proposals target adversarial semiconductor tools. The measures will accelerate reshoring and allied sourcing, affecting procurement models, qualification timelines, and costs across dual-use industries.

War economy shows resilience

Despite nearly three years of conflict, Israel’s economy has remained comparatively resilient: Tel Aviv equities are up almost 100% since October 2023, IMF growth is cited at 3.5-3.8%, and inflation near 2%. This supports investment confidence, though volatility remains elevated.

Stricter origin rules pressure manufacturing

Automotive rules of origin remain the main sticking point, with Washington seeking higher regional or US content to curb Chinese transshipment through Mexico. Companies may face rising compliance costs, supplier restructuring, and pressure to localize more inputs across North America.

Chinese investment screening stays tight

India approved only one Chinese FDI proposal worth Rs 1 crore in FY2026, while clearing 13 Hong Kong proposals worth Rs 610.42 crore. Tight screening under Press Note 3 continues to constrain China-linked capital, partnerships, technology flows and acquisition strategies.

Nickel downstreaming remains strategic

Indonesia is reaffirming domestic processing of nickel despite WTO disputes and external pressure, while continuing large downstream investment plans. For international firms, this reinforces local-processing requirements, supports battery and metals value chains, and raises the importance of regulatory positioning in mining supply.

Saudi defense alignment shift

Saudi Arabia’s defense pact with Turkey and Pakistan signals a broader shift toward regional security partnerships beyond exclusive reliance on Western protection. The arrangement could strengthen deterrence and defense-industrial ties, but also reflects a more fragmented and militarized operating environment for investors.

Dairy Access Negotiation Pressure

Canadian dairy quota allocation and supply-management rules are central US demands in current talks. Ottawa may adjust quota interpretation without dismantling the system, but any concessions could reshape agricultural market access and create knock-on effects for food importers and processors.

Energy Sourcing Diversification Accelerates

Sanctions risk is pushing India to diversify crude sourcing beyond Russia. While Russia remained the largest supplier, imports from the US rose above 50% year-on-year in FY2025-26, and purchases from the UAE, Oman, Nigeria, Brazil, and Venezuela remain significant.

Suez route security shock

A drone strike at Damietta has raised concerns around Suez Canal and Sumed corridor security, a route handling rerouted regional oil flows. Higher war-risk premiums, security reviews, and possible detours could quickly raise freight, insurance, and delivery costs for traders.

Escalation Managed Before Summit

Despite sharper measures, Beijing repeatedly described its response as restrained ahead of a planned September leaders’ summit, suggesting businesses should expect continued tactical pressure and episodic restrictions, but not necessarily an immediate collapse of bilateral commercial engagement.

Russian LNG Dependency Constrains Policy

Japan still relies on Sakhalin-2 for about 3.6-3.9 million tonnes of LNG annually, roughly 9% of imports, while a US sanctions waiver runs to December 18, 2026. Energy dependence on Russia limits policy flexibility and sustains exposure to supply and price shocks.

US-China Trade Retaliation Broadens

Beijing expanded retaliation with drone export controls, sanctions on seven US entities, and its first foreign trade national security investigation, signaling a more operational legal toolkit that can disrupt cross-border trade, licensing, sourcing decisions, and compliance planning for multinationals.

War economy fiscal strain

Russian officials warned that defense spending reached $76.2 billion in Q1 2026, around 65% of federal revenues, while oil and gas revenues fell 45% year on year. This intensifies macroeconomic fragility, budget pressure and uncertainty for investors and operating companies.

Security-linked regional connectivity

Recent Turkey-Iraq agreements explicitly connect security cooperation with trade corridors, pipelines and border infrastructure. For international businesses, this means corridor economics will remain tightly tied to regional conflict risks, border stability, and state capacity to protect strategic transport and energy assets.

Digital payments under scrutiny

US investigators explicitly targeted Brazil’s digital trade and PIX payments framework, alleging unfair disadvantages to American firms. That elevates regulatory and cross-border fintech risk, especially for payment providers, e-commerce platforms and investors relying on Brazil’s digital financial infrastructure.

Commodity Exchange Reshapes Export Pricing Control

Indonesia will launch a Strategic Mineral and Commodity Exchange under OJK by January 2027 to establish domestic reference prices for palm oil, nickel, coal, and tin. This unprecedented sovereignty move could alter procurement costs and contracting terms for international commodity buyers.

Iran gas contract uncertainty

Turkey’s 25-year gas agreement with Iran expired on July 29 without renewal, as conflict disrupted negotiations. Although flows continue, uncertainty around a supply source worth 7.7 bcm in 2025 data adds procurement, pricing, and contingency planning risks for energy-intensive business.

Eskom Restructuring Faces Labor Opposition

President Ramaphosa endorsed unbundling Eskom into separate entities, including an independent transmission operator managing R100 billion in assets. The NUM threatens legal action, warning of destabilization. Business leaders support the reform as essential for creating a competitive electricity market to attract investment and reduce costs.

Tariffs after court setbacks

After Supreme Court and trade-court defeats on earlier tariff authorities, Washington shifted to Section 301 to sustain broad import duties. For multinationals, the policy direction points to continued trade intervention, but with elevated legal volatility and possible future reversals or refunds.

Investment climate tied to security

Regional conflict is increasingly colliding with Saudi economic transformation ambitions. One report says the economy contracted 4.8% year-on-year in the second quarter, while officials emphasize protecting trade corridors and stability as prerequisites for maintaining foreign investment, development projects and business confidence.

Chinese transshipment scrutiny escalates

The White House has labeled Mexico a high-risk hub for illegal transshipment of Chinese-linked goods, estimating $67 billion moved through Mexico, India and Vietnam in 2025. The accusations could trigger stricter customs enforcement, origin verification burdens, and potential new sanctions.

Nickel downstreaming shifts upward

Indonesia’s nickel economy is moving beyond extraction toward battery materials, industrial AI, and robotics applications. With foreign investment flowing into smelters and battery projects, the strategic question is whether domestic suppliers, engineering capacity, and intellectual property can capture more value.

Existing US Duties Burden Exports

Most Indian goods currently face an extra 10% US duty under Section 301, while sectors such as steel and aluminium also face Section 232 measures. This layered tariff environment raises landed costs and complicates export competitiveness and production allocation.

Agribusiness earnings sharply deteriorate

Port disruption during harvest season is crushing farm economics. Ukrainian officials cited potential agricultural losses of $1.5-3 billion, more than 30 million tons of grain at risk of not reaching global markets, and domestic grain prices falling about 30%.

Defence tensions shape business risk

Regional security frictions tied to Taiwan, Pacific activity and China’s military posture are increasingly influencing Australia’s trade and infrastructure decisions. Companies with shipping, technology, commodities or Indo-Pacific exposure should expect higher contingency requirements, compliance scrutiny and scenario planning needs.

Fed uncertainty raises financing costs

The Federal Reserve held rates at 3.5%-3.75%, but a 9-3 split and persistent inflation have kept tightening risks alive. Markets cut the probability of a September hike from nearly 60% to about 40%, preserving uncertainty for borrowing, capex and valuations.

Weak domestic demand constrains growth

Second-quarter growth slowed to 4.3%, while officials rejected major stimulus and prioritized existing infrastructure spending. With property weakness, sluggish wages, and fragile employment undermining consumption, companies face softer China demand, continued price pressure, and greater reliance on externally exposed manufacturing sectors.

Automotive Sector Restructuring Intensifies

Germany’s auto industry is entering deeper restructuring as BMW plans 8,000 job cuts and Audi faces plant-closure unrest. Chinese competition, weak China-market performance and tariff exposure are pressuring costs, production footprints, supplier volumes and investment decisions across Europe’s automotive value chain.

Eastern Europe supply chain opportunity

Central and Eastern Europe are gaining importance as export destinations and operational buffers for German industry amid wider geopolitical fragmentation. Regional growth, stronger demand, and deeper integration prospects may support nearshoring, distribution expansion, and more diversified continental supply networks.

US tariff and transshipment risk

US customs inspections of Chinese-linked factories in Vietnam and stalled bilateral talks over transshipment, IP, and non-tariff barriers have raised the risk of additional Section 301 tariffs, threatening exporters, compliance costs, and sourcing strategies for Vietnam-based manufacturing.

Critical minerals gain strategic backing

US support for Australian mineral projects is intensifying, highlighted by a US$400 million conditional loan for Sunrise Energy Metals’ New South Wales scandium project, reinforcing Australia’s role in allied defence, aerospace and clean-tech supply chains while attracting strategic capital.

Regional industrialisation drive intensifies

South Africa is using SADC platforms in Durban to push industrialisation, infrastructure connectivity, and critical-minerals value chains. If translated into deals, this could expand regional sourcing and processing opportunities, but implementation risk remains high for cross-border investors and manufacturers.

China supply-chain leverage persists

Articles highlight continued dependence on Chinese processing and export controls across rare earths and related minerals, with China still holding close to 90% of global refining capacity in some segments, creating pricing, sourcing and technology-transfer risks for Australian projects and partners.

Diplomatic rupture deepens commercial risk

The bilateral dispute has expanded beyond tariffs into visa restrictions and ambassadorial friction, increasing the chance that political tensions spill into trade administration and investment decisions. Businesses face a less predictable operating environment for approvals, negotiations, and cross-border engagement.