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:
Disrupted Export Logistics and Supply Chains
Russian attacks on ports and logistics hubs have cut Ukraine’s export earnings by $1 billion in Q1 2026, forcing rerouting via rail and reducing agricultural and industrial exports by up to 47%. Ongoing risks threaten the stability of global supply chains reliant on Ukrainian goods.
Nuclear Negotiations Shape Risk Outlook
Ongoing nuclear talks with the US and regional actors in Istanbul and Oman are pivotal. Outcomes will determine the future of sanctions relief, market access, and regional stability, but the risk of breakdown or military escalation remains high, directly impacting investment strategies.
Defense budget politics and capability delivery
Parliamentary standoffs over a roughly US$40bn defense plan and proposed cuts create uncertainty around procurement timelines, mobilization readiness, and resilience investments. Heightened political risk can affect ratings, contractor pipelines, and business continuity planning for critical suppliers.
Supply Chain Integration and Infrastructure Push
India’s infrastructure development, including new metro lines and expressways, and focus on logistics efficiency are unlocking new industrial and residential hubs. These efforts are critical for deeper supply chain integration and attracting multinational investment in manufacturing and services.
Energy Dependency and Strategic Vulnerability
Germany’s reliance on imported energy, particularly US LNG after the Russian phase-out, exposes its economy to price shocks and political leverage. This dependency increases operational risks for manufacturers and raises costs, impacting competitiveness and long-term investment planning.
Economic Resilience Amid Adversity
Ukraine’s GDP grew 2.2% in 2025, supported by international aid, wage growth, and infrastructure investment, despite war-related disruptions. However, growth remains below pre-war forecasts, with ongoing risks from energy shortages, logistics, and reduced agricultural yields.
Infrastructure Delays Challenge Competitiveness
Major infrastructure projects, such as the Fehmarnbelt tunnel, face significant delays and cost overruns. Persistent issues with transport and logistics modernization threaten Germany’s long-term competitiveness and the efficiency of European supply chains, impacting international trade and investment.
AUKUS and Indo-Pacific Security Dynamics
Australia’s deepening defense ties with the US and UK through AUKUS reinforce its strategic role in the Indo-Pacific. This alliance supports supply chain security and regional stability, but also increases expectations for Australia’s defense spending and self-reliance amid rising China-US competition.
Semiconductor Supply Chain Realignment
The US-Taiwan trade deal mandates $250 billion in Taiwanese investment in US semiconductor manufacturing, aiming to relocate up to 40% of Taiwan’s chip supply to the US. This shift is reshaping global supply chains and risk management strategies for international businesses.
USMCA review and stricter origin
The 2026 USMCA joint review is moving toward tighter rules of origin, stronger enforcement, and more coordination on critical minerals. North American manufacturers should expect compliance burdens, sourcing shifts, and potential disruption to duty-free treatment for borderline products.
Tech Sector Expansion Amid Global Demand
Israel’s technology sector, including AI and semiconductor equipment, is experiencing robust growth, attracting major investments like Nvidia’s new campus. This expansion strengthens Israel’s global tech leadership but also strains local infrastructure and raises competition for talent.
Disaster and BCP-driven supply chains
Japan’s exposure to earthquakes and extreme weather is pushing stricter business-continuity planning and inventory strategies. Companies are investing in automated, earthquake-resilient logistics hubs and longer lead-time services to dampen disruption risk, affecting warehousing footprints, insurance costs, and supplier qualification.
UK’s Pragmatic Engagement With China
Prime Minister Keir Starmer’s visit to Beijing signals a strategic effort to revive UK-China trade ties despite domestic criticism and security concerns. The UK aims to balance economic interests with national security and values, reflecting a pragmatic diversification strategy.
Regulatory Reform and Ease of Doing Business
Recent legal and regulatory reforms, including the repeal of obsolete statutes and streamlined customs and tax processes, are improving India’s business climate. These measures enhance transparency, reduce compliance costs, and support foreign investor confidence in long-term operations.
Palm waste export restrictions
President Prabowo announced a ban on exporting used cooking oil and palm waste to prioritize domestic aviation fuel and biofuel ambitions. The move may tighten regional feedstock availability, disrupt traders’ supply contracts, and increase regulatory risk in Indonesia’s palm-based derivative exports.
Private Sector Empowerment and FDI Reforms
Recent reforms elevate the private sector as a primary growth engine, with policies favoring large domestic conglomerates and streamlined FDI procedures. While this attracts high-quality investment, regulatory transparency and anti-corruption enforcement remain critical for sustained international confidence.
Current Account Deficit and Financing
Brazil’s current account deficit reached US$68.8 billion in 2025 (3.02% of GDP), financed mainly by long-term foreign investment. While trade balances remain positive, deficits in services and primary income require ongoing capital inflows to sustain external stability.
Upgraded EU-Vietnam Strategic Partnership
Vietnam and the EU have elevated ties to a comprehensive strategic partnership, deepening cooperation in trade, critical minerals, semiconductors, and technology. This move supports supply chain security, market access, and investment, especially as US tariffs reshape global trade dynamics.
ESG Standards and Regulatory Pressure
Environmental and social governance (ESG) standards are increasingly shaping investment and operational decisions, especially in mining. While Indonesia is adopting international frameworks, enforcement remains uneven, and companies face rising pressure from global buyers and lenders to improve compliance and transparency.
Trade gap and dollar-driven imbalances
A widening US trade deficit—near $1 trillion annually in recent data—reflects strong import demand and softer exports. Persistent imbalances amplify political pressure for protectionism, invite sectoral tariffs, and increase FX sensitivity for exporters, reshoring economics, and pricing strategies.
Energy Sector Expansion and Export Infrastructure
Israel’s energy sector is expanding, with new gas contracts, export pipelines to Egypt, and increased production. Long-term contracts and infrastructure investments support revenue stability, but regional geopolitical tensions pose ongoing risks to supply and capital allocation.
Automotive Sector Faces Structural Pressures
Germany’s auto industry is hit by US tariffs, fierce Chinese competition, and the costs of electrification. New EV subsidies help, but also benefit Chinese brands, raising concerns about domestic market share and the effectiveness of industrial policy.
Energy grid strikes, blackouts
Mass drone and missile attacks are degrading generation, substations and high-voltage lines, triggering nationwide emergency outages and nuclear output reductions. Winter power deficits raise operating downtime, raise input costs, complicate warehousing and cold-chain logistics, and heighten force-majeure risk.
Electricity market and hydro reform
Le Parlement avance une réforme des barrages: passage des concessions à un régime d’autorisation, fin de contentieux UE et relance d’investissements. Mais mise aux enchères d’au moins 40% des capacités, plafonnement EDF, créent risques de prix et de contrats long terme.
USMCA Review and North America
The mandated USMCA joint review is approaching, with U.S. officials signaling tougher rules of origin, critical-minerals cooperation, and potential bilateralization. Any tightening could reshape automotive and industrial supply chains, compliance costs, and investment decisions across Mexico, Canada, and the U.S.
Energy Transition and Power Security
Eskom’s reforms and renewable energy expansion have reduced load shedding, but high electricity costs and grid vulnerabilities persist. Recent tariff relief for energy-intensive industries aims to prevent deindustrialization, yet long-term competitiveness depends on sustainable pricing and infrastructure modernization.
Semiconductor Supply Chain Dominance
Taiwan remains the global leader in advanced semiconductor manufacturing, with TSMC and related firms central to AI, electronics, and automotive supply chains. Recent US-Taiwan deals reinforce this role, but also expose the sector to geopolitical pressures and relocation risks.
Semiconductor and Technology Sector Push
Vietnam is prioritizing the development of its semiconductor and technology industries, including chip fabrication and critical minerals processing. Collaboration with the EU and other partners aims to move Vietnam up the value chain, supporting high-tech investment and innovation ecosystems.
US trade talks and tariff risk
Vietnam is negotiating a more “reciprocal” trade framework with the US amid tariff pressure and scrutiny of Vietnam’s export surplus. Outcomes could reshape duties, rules-of-origin enforcement and supply-chain routing, affecting apparel, electronics, and China-plus-one strategies.
State-led investment via Danantara
Danantara is centralizing SOE assets and launching about US$7bn in downstream “hilirisasi” projects, while signaling possible market interventions and strategic acquisitions. The model can accelerate infrastructure and processing capacity, but raises governance, competition, and expropriation-perception risks for foreign partners.
USMCA Review and North America Rules
Washington and Mexico have begun talks ahead of the July 1 USMCA joint review, targeting tougher rules of origin, critical‑minerals cooperation, and anti‑dumping measures. Automotive and industrial supply chains face redesign risk, while Canada‑US tensions add uncertainty for trilateral planning.
Shadow fleet interdictions and safety
France’s boarding of the GRINCH and allied moves to seize or detain shadow‑fleet tankers signal a shift from monitoring to physical enforcement. Aging, falsely flagged ships elevate spill, detention and force‑majeure risk for shippers, insurers, and terminals.
Geopolitical Tensions with China
Rising military pressure and large-scale drills by China around Taiwan heighten the risk of conflict, threatening global supply chains and investment stability. Any escalation could disrupt semiconductor flows, impacting industries worldwide and potentially causing a severe global economic downturn.
Geopolitical Realignment and US Tensions
South Africa’s closer military and economic ties with China, Russia, and Iran, including recent BRICS naval exercises, have strained US relations. This risks new US tariffs—potentially up to 55%—on key exports, threatening supply chains, trade access, and investment certainty.
USMCA 2026 review renegotiation
Washington and Mexico have opened talks to rewrite USMCA ahead of the July review, targeting tougher rules of origin, critical minerals cooperation, and anti-dumping tools. North American manufacturers should prepare for compliance redesign, sourcing shifts, and border-process bottlenecks.
Critical Mineral Diversification Strategy
Japanese firms are rapidly diversifying supply chains for minerals like gallium and rare earths, securing new sources in Kazakhstan and Australia. These efforts aim to reduce strategic vulnerabilities, ensure manufacturing continuity, and stabilize high-tech sectors amid global supply shocks.