Mission Grey Daily Brief - July 26, 2024
Summary of the Global Situation for Businesses and Investors:
Global markets are experiencing heightened volatility as the US-China trade war escalates, with new tariffs being imposed and technological restrictions tightening. Tensions in the Middle East continue to rise, impacting oil prices and energy markets. The UK's political crisis deepens as the new Prime Minister takes office, facing a challenging economic outlook and a potential no-deal Brexit. Meanwhile, Russia's assertive foreign policy and increasing influence in Africa are causing concern for Western powers. Businesses and investors are navigating a complex and uncertain geopolitical landscape, requiring careful strategic planning to mitigate risks and capitalize on emerging opportunities.
US-China Trade War: Technological Cold War
The US-China trade war has entered a new phase, with the US imposing additional tariffs on Chinese goods and restricting technology transfers. China has retaliated with tariffs of its own and threatened to restrict rare earth exports to the US. This escalation marks a shift towards a broader technological cold war, with both sides recognizing the strategic importance of technology and seeking to protect their national interests. Businesses dependent on Chinese manufacturing or US technology face significant disruption, and those with supply chains spanning both countries are particularly vulnerable.
Rising Tensions in the Middle East: Impact on Energy Markets
Tensions in the Middle East, particularly between Iran and the US and its allies, continue to escalate. The Strait of Hormuz, a critical chokepoint for global oil supplies, has become a flashpoint, with several incidents involving oil tankers and military assets. These tensions are impacting oil prices and energy markets, creating a volatile environment for businesses and investors. Companies with exposure to the region, particularly in the energy and shipping sectors, face heightened political and operational risks, and should prepare for potential disruptions to oil supplies and price volatility.
Political Crisis in the UK: No-Deal Brexit Looming
The UK is facing a political and economic crisis as the new Prime Minister takes office, inheriting a deeply divided country and a challenging Brexit negotiation process. With the deadline approaching, the risk of a no-deal Brexit is increasing, which could have significant implications for businesses and investors. A no-deal scenario would result in immediate tariffs, regulatory changes, and border disruptions, impacting supply chains and the flow of goods and services. Businesses should prepare for potential customs delays, regulatory changes, and currency volatility, and consider diversifying their supply chains and reviewing contracts to mitigate risks.
Russia's Growing Influence in Africa: A Concern for the West
Russia's assertive foreign policy and increasing influence in Africa are causing concern among Western powers. Russia has been expanding its economic, military, and diplomatic presence across the continent, filling vacuums left by retreating Western influence. This expansion provides Russia with strategic footholds and influence in regions of growing global importance. Western businesses and investors, particularly those in the natural resources sector, face increased competition and potential disruption to their operations. Additionally, Russia's growing influence could lead to a shift in geopolitical alliances, impacting the business environment and long-term investment strategies.
Recommendations for Businesses and Investors:
Risks:
- US-China Trade War: The technological cold war between the US and China could result in supply chain disruptions, increased costs, and restricted access to critical technologies for businesses.
- Middle East Tensions: Rising tensions in the Middle East pose risks of oil supply disruptions and price volatility, impacting energy markets and businesses dependent on stable energy supplies.
- No-Deal Brexit: A no-deal Brexit could lead to immediate tariffs, regulatory changes, and border disruptions, affecting supply chains and the flow of goods and services between the UK and the EU.
- Russia's African Influence: Russia's growing influence in Africa may lead to increased competition and disruption for Western businesses, particularly in the natural resources sector, and potential geopolitical shifts.
Opportunities:
- Diversification: Businesses can diversify their supply chains and sourcing strategies to mitigate risks associated with US-China tensions and Brexit.
- Alternative Markets: Explore alternative markets and investment destinations to reduce exposure to volatile regions, such as the Middle East and Russia.
- Risk Management: Develop robust risk management strategies, including political risk insurance and contingency plans, to prepare for potential disruptions.
- Local Partnerships: Foster local partnerships and collaborations to navigate regulatory changes and gain insights into evolving market dynamics.
- Technology Adaptation: Stay abreast of technological advancements and adaptations to maintain competitiveness and mitigate the impact of technology restrictions.
Further Reading:
Themes around the World:
Semiconductor Supply Chain Reshoring
The agreement aims to relocate up to 40% of Taiwan’s semiconductor supply chain to the US. TSMC and peers will build multiple advanced fabs in Arizona, backed by $250 billion in credit guarantees, reducing US reliance on Taiwan and mitigating geopolitical risks.
Tourism Sector Recovery and Rebranding
Thailand targets a record 3 trillion baht in tourism revenue for 2026, leveraging global icons and digital campaigns to attract high-spending visitors. However, safety concerns, border tensions, and slow recovery in some regions continue to impact tourism flows and sector stability.
Fragmentation Of Global Governance
US disengagement from multilateral institutions fosters a shift toward regional and bilateral diplomacy. This fragmentation undermines global standards, increases regulatory uncertainty, and forces international businesses to navigate diverging climate, trade, and digital frameworks.
Reshoring And Supply Chain Security
Major US industrial policy now prioritizes reshoring advanced manufacturing, especially in AI and semiconductors. Large-scale investments aim to reduce supply chain vulnerabilities and create middle-class jobs, but higher costs and regulatory hurdles challenge implementation and global competitiveness.
Fossil Fuel Expansion And Energy Policy
The Trump administration’s aggressive push for fossil fuels, including efforts to control Venezuela’s oil reserves and rollback of environmental regulations, signals a durable tilt against clean energy. This shift may hinder the US energy transition and cede global clean-tech leadership to China.
Semiconductor and Technology Investment Surge
A landmark US-Taiwan deal commits at least $250 billion in Taiwanese semiconductor investments in the US, with reciprocal tariff reductions to 15%. This aims to boost US tech self-sufficiency, secure supply chains, and reshape the global semiconductor landscape.
Labor Market and Immigration Uncertainties
US labor market data shows mixed signals: job growth has slowed, unemployment remains low, and wage growth persists. Immigration policy remains restrictive, impacting talent availability and operational costs for multinational firms, especially in technology and healthcare sectors.
Escalating Western Sanctions Pressure
Western sanctions on Russia, especially targeting energy, finance, and technology, have intensified in 2025-2026. These measures have led to a 24% drop in oil and gas revenues and a 35% weekly loss in oil export income, severely constraining Russia’s budget and global trade integration.
High Unemployment And Tariff Pressures
Unemployment remains above 31%, with major retrenchments in manufacturing and automotive sectors. US tariffs on exports, especially vehicles, are expected to worsen job losses and erode industrial competitiveness, posing significant risks for supply chains and foreign direct investment.
US-Taiwan Trade Pact Progress
Taiwan and the US reached consensus on a trade deal lowering tariffs on Taiwanese exports to 15%. The agreement includes preferential treatment for semiconductors and expanded TSMC investment in Arizona, enhancing bilateral economic ties and supply chain resilience.
Trade Diversification and New Agreements
Brazil is actively expanding trade ties beyond traditional partners, deepening relations with India, Southeast Asia, and the Middle East. Ongoing negotiations with Canada and the UAE, and the push for new market access, are reshaping Brazil’s international trade landscape and reducing single-market dependence.
Military Dominance and Private Sector Constraints
The Egyptian military’s control over key economic sectors and financial reserves limits private sector growth and transparency. The IMF and investors continue to press for structural reforms and reduced military influence to unlock investment and sustainable growth.
Foreign Direct Investment Surge
FDI in Vietnam rose 8.9% to $23.6 billion in 2025, with manufacturing accounting for 82.8%. High-tech, green industries, and logistics attract multinational corporations, reinforcing Vietnam’s role as a strategic hub in global supply chains and boosting long-term investment prospects.
US-China Technology Competition and Export Controls
US policy reversals on AI chip export controls have allowed Nvidia to resume sales to China, raising concerns about US technological leadership and intellectual property risks. This shift could boost China’s AI capabilities, alter global tech supply chains, and intensify the race for technological standards and market access.
Monetary Policy and Inflation Management
Turkey has reduced inflation from over 42% to just above 30% in 2025, with further declines targeted for 2026. Tight monetary policy and structural reforms have stabilized the economy, but high inflation and currency volatility remain key risks for investors and supply chain planners.
Rising Global Trade Barriers
U.S. tariffs and the EU’s Carbon Border Adjustment Mechanism are increasing costs for Korean exports, particularly autos, steel, and electronics. These barriers challenge competitiveness and require strategic adjustments in pricing, compliance, and market targeting for international businesses.
Labour Market Strains and Skills Shortages
Unemployment in the UK has risen to 5.1%, the highest in nearly a decade, with youth joblessness and skills gaps posing challenges for business operations. Companies must adapt workforce strategies to mitigate risks from AI adoption and demographic shifts.
Sustainable Aquaculture and Fisheries Transformation
The seafood sector targets $11.5 billion in exports for 2026, shifting from capture fisheries to sustainable aquaculture. Emphasis is on environmental monitoring, disease control, and integrated value chains. Meeting global ESG, animal welfare, and traceability standards is essential for export growth and long-term sectoral competitiveness.
Global Supply Chain Vulnerabilities
China’s tightening of export controls on critical minerals and dual-use goods, especially to Japan, highlights the fragility of global supply chains. These actions, which impact sectors from semiconductors to EVs, force multinationals to reassess sourcing and resilience strategies amid rising geopolitical risk.
China-Japan Trade Tensions Escalate
China’s sweeping export controls on dual-use items and rare earths to Japan, in retaliation for Tokyo’s Taiwan stance, threaten to disrupt Japanese manufacturing, especially in automotive and electronics sectors, and heighten geopolitical and supply chain risks for international investors.
US-Taiwan Semiconductor Trade Pact
The landmark 2026 US-Taiwan trade agreement reduces US tariffs on Taiwanese goods to 15% in exchange for at least $250 billion in Taiwanese semiconductor investment in the US, reshaping global supply chains and boosting US-Taiwan economic integration.
Energy Sector Transformation and Risks
Ongoing reforms and privatisation in energy, including refinery upgrades and power sector restructuring, seek to address chronic inefficiencies. However, supply disruptions, financial fragility, and regulatory uncertainty continue to threaten energy reliability and investment returns.
Nearshoring Drives Supply Chain Shifts
Mexico’s proximity to the US and resilient manufacturing sector have accelerated nearshoring, attracting investment and supply chain reconfiguration. Export growth to the US reached 9% in 2025, positioning Mexico as a strategic alternative amid global trade disruptions and China tariffs.
Technology Export Controls and Geopolitical Rivalry
US technology export controls, especially targeting China, continue to escalate. This restricts access to advanced semiconductors and dual-use technologies, prompting retaliatory measures and complicating cross-border R&D, investment, and supply chain strategies for global tech firms.
Sustainability and Energy Transition Policies
India’s SHANTI Act and nuclear energy reforms enable private and foreign participation in clean energy, supporting long-term sustainability goals. Expanded renewable and nuclear capacity, alongside environmental regulations, create new investment opportunities and future-proof supply chains against climate risks.
Macroeconomic Stabilisation and Reform
Comprehensive reforms have sharply reduced inflation from 29.2% to 4.5%, improved tax revenues, and turned the current account deficit into a surplus. These measures have restored investor confidence and generated a positive trajectory for GDP growth, crucial for international business planning.
Supply Chain Resilience and Diversification
The US-Taiwan deal includes mechanisms for ongoing consultation on tariff and supply chain issues, supporting resilience against shocks. Taiwan’s strategy emphasizes global diversification, advanced packaging, and maintaining technological leadership amid rising global competition.
Energy Security and Diversification Strategy
Turkey’s energy policy emphasizes diversification, with LNG imports from the US and multiple pipeline sources. This reduces vulnerability to Russian supply shocks and positions Turkey as a critical energy transit hub, affecting investment strategies in energy, infrastructure, and manufacturing.
Export Competitiveness and Structural Weaknesses
Pakistan’s export-to-GDP ratio has fallen to 10.4%, with high costs, poor infrastructure, and inconsistent policies undermining competitiveness. Reliance on remittances and debt, rather than exports, exposes the economy to external shocks, limiting growth and supply chain integration.
Supply Chain Diversification Push
UK supply chain reforms emphasize diversification of critical sources, forging trade deals with friendly nations, and boosting domestic manufacturing. These measures aim to reduce foreign dependence, but require significant adaptation for international businesses operating in the UK.
Cartel Violence and Organized Crime Risks
Persistent cartel violence, compounded by potential influxes of Venezuelan criminal groups, continues to threaten security, logistics, and investor confidence. Mexico’s border states remain especially vulnerable, requiring robust risk mitigation for supply chains and personnel.
Regional Security and Political Risks
Egypt faces persistent regional security risks from conflicts in Gaza, Sinai, and neighboring states. Military modernization, migration pressures, and volatile alliances affect investor sentiment, supply chain reliability, and cross-border operations, requiring robust risk management.
Energy Import Dependency and LNG Shift
Domestic gas production declines and regional supply disruptions forced Egypt to import a record 9 million metric tons of LNG in 2025. The country is transitioning from a gas exporter to a major importer, raising costs and energy security concerns.
Canada’s Energy Market Diversification
Canada is accelerating efforts to expand oil and LNG exports to Asia, aiming to reduce dependence on the US. Major pipeline and LNG projects face regulatory, Indigenous, and environmental hurdles, but are critical for future trade resilience and investment strategies.
China-Japan Rare Earths Standoff
China’s sweeping export controls on rare earths and dual-use goods to Japan have escalated, threatening up to $17 billion in economic losses and severely disrupting high-tech supply chains. Japanese manufacturers face urgent pressure to diversify sourcing and invest in domestic alternatives.
Labour-Intensive Sector Tax Incentives
The government will cover personal income taxes for workers in labour-intensive industries until 2026, supporting household income and economic stability. This stimulus benefits sectors like textiles, footwear, and tourism, enhancing resilience and competitiveness for international investors.