Global Risk Indexes (01-02-2025)

Global 98 (0 —)
MENA 96 ( —)
APAC 97 ( —)
Europe 99 ( —)
Africa 97 (-1 ▼)
AMERs 97 ( —)
Markets 99 ( —)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

Navigating Global Intersections: Where Trade, Finance, Energy and Geopolitics Converge

U.S. Tariffs, AI Rivalry, and Energy Realignments: Global Markets Face a Pivotal Transformation

Trump's tariff escalation sets the stage for a new era of trade protectionism. The U.S. has officially imposed 25% tariffs on imports from Canada and Mexico, with a 10% duty on Chinese goods, a move that is sending shockwaves through global supply chains. While exemptions may be available, their limited scope suggests that trade tensions will persist. The immediate impact is evident in currency markets, where the Canadian dollar and Mexican peso have come under pressure, while U.S. equities saw a sharp sell-off, particularly in manufacturing and consumer sectors.

North American economic integration is under threat. Canada and Mexico, the U.S.'s largest trade partners, are now recalibrating their strategies. Mexico is pushing for energy independence, with Grupo Carso and Pemex negotiating new gas field expansions to reduce reliance on U.S. imports. Meanwhile, Canada's economy is struggling with contractions in key industries, and the risk of retaliatory tariffs looms large. If Canada and Mexico respond with countermeasures, U.S. exporters'especially in agriculture and energy'will face severe disruptions.

Energy markets brace for turbulence. Trump's threat to impose a 10% tariff on Canadian oil imports is adding pressure to an already volatile global energy market. Many U.S. refiners rely on Canadian crude, and the potential increase in costs could lead to production cuts. Meanwhile, Libya's push to increase oil production faces structural challenges, and OPEC remains under pressure from U.S. policy shifts. Brent crude prices remain volatile, with analysts anticipating further fluctuations as geopolitical uncertainties mount.

China's AI disruption triggers a geopolitical technology race. DeepSeek's AI breakthroughs continue to reshape global tech markets, forcing U.S. and European firms to rethink their competitive strategies. While Microsoft and Meta are accelerating AI investments, regulatory scrutiny in Europe and Asia is complicating their growth trajectories. Meanwhile, South Korea's privacy regulators are launching investigations into DeepSeek, highlighting the growing tension over data governance and digital sovereignty.

European economic weakness contrasts with U.S. resilience. The eurozone continues to struggle, with German inflation stagnating at 2.8% and ECB rate cuts signaling a prolonged downturn. The Bank of England faces pressure to ease rates, but bond market volatility remains a concern. In contrast, the U.S. labor market remains strong, with the Fed signaling a cautious approach to rate cuts despite inflationary risks posed by new tariffs.

Emerging markets navigate structural shifts. Africa's largest copper producers, the DRC and Zambia, are pushing for greater control over metal trading, aiming to capitalize on surging demand from the AI and EV industries. Peru is also shifting its economic focus, with agriculture set to overtake mining as the country's primary growth driver by 2050. These trends signal a broader realignment in global commodity markets as resource-holding nations seek greater leverage over trade dynamics.

Strategic imperatives for investors and policymakers. With trade protectionism rising, businesses must reassess supply chain resilience and trade diversification strategies. Investors should focus on defensive sectors such as AI, energy, and commodities while remaining cautious about industries vulnerable to tariffs. The coming months will be crucial in determining the trajectory of global trade policies, technological competition, and energy market stability.

Geopolitical Risk Assessment for the Global Markets
(01-02-2025)

The global economy is entering a critical phase, marked by escalating trade conflicts, AI-driven industrial competition, and energy supply chain realignments. The U.S. imposition of tariffs on Canada, Mexico, and China will reshape trade flows, increasing costs for consumers and exacerbating inflationary pressures. Energy markets remain fragile as geopolitical uncertainty in Libya, Mexico, and OPEC+ nations threatens supply stability. Meanwhile, AI disruptions are intensifying the technology arms race between the U.S. and China, with long-term implications for industrial policy, capital allocation, and global market dynamics. Investors and policymakers must navigate heightened volatility and structural shifts in global economic alignments.

Geopolitical Risk Index

Developments to Follow for the Global Markets (See All Global)

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