Global Risk Indexes (13-03-2025)

Global 96 (0 —)
MENA 99 ( —)
APAC 97 (-1 ▼)
Europe 98 ( —)
Africa 96 (+1 ▲)
AMERs 88 (+1 ▲)
Markets 99 (+1 ▲)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

U.S.-Canada Trade War Escalates, China’s Pacific Expansion Worries Allies, and Global Markets React to Rising Volatility

Global economic tensions are reaching a critical inflection point as multiple crises unfold across trade, energy, and financial markets. The U.S.-Canada trade war has escalated further, with Ottawa imposing retaliatory tariffs worth $20 billion in response to Washington’s steel and aluminum duties. Meanwhile, China’s expanding influence in the Pacific is fueling diplomatic conflicts, and emerging markets are navigating mounting financial and security risks. Investors should brace for prolonged volatility as global economic fragmentation deepens.

U.S.-Canada Trade War Enters Dangerous New Phase

The U.S. tariffs on steel and aluminum have triggered an aggressive counter-response from Canada, which is imposing its own levies on key U.S. exports, including technology products and industrial materials. With Canadian Prime Minister Mark Carney taking office this week, the diplomatic fallout could deepen, particularly as Trump’s rhetoric hints at broader economic integration pressures on Ottawa. The Canadian dollar has weakened against the U.S. dollar as investors fear a prolonged trade standoff that could damage North American supply chains.

At the same time, the EU is weighing its own response, with some policymakers calling for sector-specific tariffs on U.S. tech and industrial goods. If implemented, this could push the global economy further toward protectionist blocs, increasing inflationary pressures and disrupting capital flows.

China’s Growing Influence in the Pacific Triggers Diplomatic Confrontation

Beijing’s deepening economic and strategic ties with Pacific Island nations are raising alarms among Five Eyes intelligence allies. New Zealand’s intelligence chief has openly warned that China’s efforts to integrate security and economic cooperation in the region could undermine Western influence. This follows Beijing’s recent strategic pact with the Cook Islands, which caught Wellington off guard and has triggered political backlash.

China’s aggressive economic diplomacy is reshaping regional alliances, creating an increasingly complex geopolitical landscape that investors must monitor. Should tensions continue to rise, strategic sectors such as shipping, rare earth minerals, and defense-related industries could see heightened market volatility.

Bribery Scandal in Europe Threatens Technology Policy and Trade Relations

Belgian prosecutors have detained multiple individuals over an alleged bribery scheme in the European Parliament that may have benefited China’s Huawei. The scandal is expected to put further pressure on EU policymakers to restrict Chinese tech companies from European markets. With ongoing debates about 5G infrastructure security, this development could accelerate measures that curb Chinese tech expansion in Europe, impacting companies such as Huawei and Xiaomi.

Energy Markets Face Heightened Volatility as Trade Wars Weigh on Demand

Oil prices remain under pressure as trade war concerns weigh on global demand. Brent crude is trading at $70.41 per barrel, while WTI has fallen to $67.05. The International Energy Agency (IEA) has revised its demand growth forecast downward due to macroeconomic uncertainties, particularly in Asia, where trade tensions are dampening industrial activity.

Meanwhile, a potential Russia-Ukraine ceasefire is being discussed, but skepticism remains over its viability. Investors should closely monitor Russian energy supply policies, as any shifts in production strategies could have broad implications for oil and gas markets.

Emerging Market Risks Intensify

Pakistan is facing another major security crisis following a militant train hijacking, which has already resulted in dozens of casualties. The incident highlights growing instability in Balochistan, a region critical to China’s Belt and Road Initiative. With foreign direct investment in Pakistan already declining, this latest security crisis may further deter capital inflows.

Additionally, India is expanding its search for critical minerals in the Democratic Republic of Congo, but ongoing conflicts involving rebel groups could complicate its efforts. The move signals New Delhi’s growing urgency to secure essential raw materials for its energy transition strategy, yet geopolitical instability in Africa remains a significant challenge.

Strategic Takeaways for Investors and Policymakers

  • Trade and Supply Chain Reconfiguration: Companies should reassess supply chain risks as trade tensions between the U.S., Canada, and the EU continue to escalate.
  • Tech Sector Volatility: Investors should monitor European regulatory actions against Huawei and other Chinese firms, as geopolitical risks could reshape the global technology landscape.
  • Energy Market Uncertainty: The potential Russia-Ukraine ceasefire could impact oil price trajectories, while trade war-driven demand concerns could weigh on energy stocks.
  • Emerging Market Risks: Increased geopolitical instability in Pakistan and Congo could pose investment risks for companies operating in these regions.

With multiple global economic conflicts intensifying, markets are entering a period of heightened risk. Investors must adopt a cautious and strategic approach to navigating these turbulent conditions.

Geopolitical Risk Assessment for the Global Markets
(13-03-2025)

Global economic fragmentation is accelerating as trade wars intensify, geopolitical tensions escalate, and financial markets adjust to unprecedented uncertainty. The U.S. has expanded its protectionist measures, triggering a second wave of retaliation from key partners, including Canada and the EU. Meanwhile, China’s diplomatic and economic maneuvers in the Pacific are heightening regional frictions, and Europe is facing a corruption scandal that could impact future technology policies. The energy sector remains volatile amid shifting alliances, while emerging markets face growing instability. Investors should expect sustained market turbulence, with rising inflationary pressures, geopolitical-driven currency fluctuations, and deepening global supply chain disruptions.

Geopolitical Risk Index

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

Previous Briefings

See all previous briefings