A man walks past China’s and USA’s flags before a meeting between US Treasury Secretary Janet Yellen and China’s Vice Premier He Lifeng at the Guangdong Zhudao Guest House in the southern Chinese city of Guangzhou, on April 5, 2024.
Pedro Pardo | Afp | Getty Images
The U.S. and China have yet to announce an extension to their tariff deadline, with tensions over several thorny issues flaring up again just as a fragile truce nears its expiry.
Following the latest bilateral meeting in Stockholm in July, Beijing had struck an optimistic tone, saying that both sides would work toward extending the tariff truce by another 90 days.
U.S. negotiators, however, had put the ball in President Donald Trump’s court on prolonging the tariff truce. Trump, so far, has offered little indication on whether he will go for an extension, stoking concerns that tensions between the world’s two largest economies could rise again.
In May, the two sides agreed to a 90-day tariff truce that reduced duties the prohibitive 145% in April while also pausing a series of punitive measures, allowing room for further negotiation to reach a lasting deal. That agreement is set to expire Tuesday.
China’s U.S.-bound shipments currently face a 20% tariff related to the country’s alleged role in the flow of fentanyl into the U.S. and a 10% baseline tariff, stacked on top of a 25% duty on certain goods imposed during Trump’s first term. American goods to China are subject to over 32.6% tariffs, according to the Peterson Institute for International Economics.
The Office of the United States Trade Representative and Ministry of Foreign Affairs of China did not respond to CNBC’s requests for comments.
While an official tariff extension still hangs in the balance, experts widely expect a summit between Trump and Xi to take place in Beijing in the coming months.
“That implies a more stable U.S.-China relationship … but by no means a friendlier one,” said Ian Bremmer, president and founder of Eurasia Group, noting that both sides are “structurally heading more toward decoupling as a consequence of the new global trade and geopolitical environment.”
Purchase agreement, transshipment
Despite the tariff truce, trade between the Washington and Beijing has been hit substantially.
China’s July trade data showed its exports to the U.S. shrank for a fourth consecutive month, falling 21.7% from a year earlier. Shipments in May had sunk by the most since the start of the pandemic, according to data from the Wind Information.
A potential trade deal could involve China committing to ramp up purchases of U.S. goods, particularly energy, agricultural goods, and if the U.S. allowed it, semiconductors and chipmaking equipment, said Julian Evans-Pritchard, head of China economics at Capital Economics.
China’s overall imports from the U.S. dropped 10.3% in the January to July period.
The final deal could take various forms, said Evans-Pritchard, noting that one of the most probable outcome would be a “sequel” to the phase-one agreement signed in January 2020.
At that time, China had agreed to a $200 billion increase in annual purchases of U.S. goods and services relative to the 2017 levels, a target that Beijing eventually failed to meet as the pandemic disrupted trade.
“It is plausible that Trump may treat the Phase One deal as unfinished business, revamping it with even higher purchase targets,” added Evans-Pritchard.
In a post on Truth Social Sunday night stateside, Trump said he hoped China to “quickly quadruple its soybean orders.” China has ramped up soybean purchases in recent months, with imports volumes growing 36.2%, 10.4% and 18.4% in May, June and July, respectively, according to Wind Information.
China’s total exports to the U.S. have dropped 12.6% this year as of July. That has, however, been largely offset by a 13.5% export growth to Southeast Asian nations, drawing scrutiny over the so-called “transshipment” of goods.
Trade experts have warned that exports — a critical growth driver for China’s economy — could slow down in the coming months as Trump levies a blanket 40% tariff on goods routed through third-party countries, although providing little clarity over how those shipments would be defined.
Semiconductor export controls
Tensions between the U.S. and China on semiconductor export controls have also escalated in recent weeks, even as Nvidia plans to resume sales of its H20 chip to China, reversing export controls on H20 sales imposed by Trump in April.
The H20 resumption signaled a “modest course correction rather than a strategic shift,” said Gabriel Wildau, managing director at political consultancy Teneo, noting that substantial export-control loosening will not occur.
That said, Trump may consider offering concessions on export controls that others in his administration consider “excessive” in order to conclude a deal with Beijing, Wildau added.
The resumption of H20 sales comes as national security hawks in the Trump administration warn that U.S. chips and other technology could strengthen China’s AI sector and its military. Others argue that further restrictions risk backfiring, and could prompt Beijing to accelerate efforts to develop domestic alternatives and reduce reliance on American suppliers.
Chinese officials have pushed for the U.S. to ease export controls on high-bandwidth memory chips — whose shipments to China were banned by former President Joe Biden in 2024 — the Financial Times reported Sunday. Nvidia and AMD have agreed to give the U.S. government 15% of their revenues from chip sales to China in order to secure export licenses, Financial Times reported.
“What we are seeing is in effect the monetization of U.S. trade policy in which American companies must pay the US government for permission to export. If that’s the case, we’ve entered into a new and dangerous world,” said Stephen Olson, senior visiting fellow at ISEAS-Yusof Ishak Institute and a former U.S. trade negotiator.
Rare-earth exports
The leverage that Beijing wields through its dominance of rare earths could be an additional factor pushing Trump to offer concessions — and a card that Beijing will almost certainly use, according to experts.
Beijing agreed to relax its export ban on rare-earth metals and magnets to the U.S. in June and moved to expedite licensing process following a series of negotiations, although few details were made available about its commitment to speed up shipments of the critical minerals.
In June, the country’s rare-earth exports globally surged 60% to 7,742 metric tons, highest since January 2012, according to data on Wind Information, before dropping to 5,994.3 metric tons in July.
China’s exports of rare-earth magnets to the U.S. in June jumped more than seven times from the prior month, with American firms receiving about 353 metric tons of the permanent magnets in June, according to official customs data. A similar country-specific breakdown will be released on Aug. 20.
Secondary tariffs over Russian crude
Another thorny issue in the U.S.-China negotiation is Trump’s threat of punishing Beijing with additional tariffs over its purchases of Russian oil.
Answering a question on whether he would consider penalizing China for the same reason, Trump said: “I can’t tell you yet. But I can — we did it with — we did it with India. We’re doing it probably with a couple of others. One of them could be China.”
China’s overall imports from Russia edged higher in July to $10.06 billion, the highest level since March, although down 7.7% overall this year from the same period in 2024, according to the latest customs data.
Xi held a phone call with President Vladimir Putin on Friday ahead of the Russian leader’s meeting with Trump over the Russia-Ukraine that is now in its fourth year.
The phone call with Putin appeared “urgent” as it took place during Xi’s scheduled annual summer vacation, said Neo Wang, lead China economist at Evercore ISI.
“Both Xi and Putin would want to leverage their close ties in negotiations with Trump by making him guess what was actually talked about or even agreed on during their call,” Wang added.
On July 20, Andy Burnham has been chosen to be the next Prime Minister in UK. The appointment of a new Prime Minister in the United Kingdom often raises questions from people outside the country, especially when no nationwide election has taken place. Many wonder how a new national leader can assume office without voters casting ballots. The answer lies in the UK’s parliamentary system, where the Prime Minister is not directly elected by the public but is instead chosen based on who commands the confidence of the House of Commons.
How the UK Selects Its Prime Minister
Unlike presidential systems where citizens vote directly for the head of government, the United Kingdom elects Members of Parliament (MPs) during a general election. The political party that secures a majority of seats in the House of Commons usually forms the government, and that party selects its own leader to serve as Prime Minister.
If the leader resigns, becomes unable to continue, or is replaced by their party, the governing party can choose a new leader without triggering a general election. As long as the new leader is able to maintain the confidence of Parliament, they can immediately become Prime Minister after being formally appointed by the monarch.
Why No Election Was Required
A general election is not automatically required every time the office of Prime Minister changes hands. The governing party retains its parliamentary majority because voters elected MPs rather than an individual Prime Minister. If the ruling party chooses a new leader through its internal leadership process, the government continues to operate without interruption.
This constitutional arrangement provides stability and allows the government to continue functioning during periods of political transition. It also avoids the expense and disruption of holding a nationwide election every time party leadership changes.
The King’s Constitutional Role
After a governing party elects a new leader, the monarch invites that individual to form a government. This constitutional step is largely ceremonial and follows long-established conventions. The King appoints the person most likely to command a majority in the House of Commons, ensuring continuity of government.
Although the monarch formally appoints the Prime Minister, political power rests with Parliament and the elected representatives of the British people.
Could an Election Still Happen?
Yes. A newly appointed Prime Minister has the authority to request a general election if they believe it is politically advantageous or if they seek a stronger public mandate. Parliament can also reach a point where a government loses the confidence of the House of Commons, potentially leading to an election or the formation of a new government.
In many cases, however, a new Prime Minister continues governing until the next scheduled general election.
What This Means for the UK
The UK’s parliamentary democracy is designed to ensure government continuity while respecting the results of the most recent general election. Leadership changes within the governing party do not automatically alter the composition of Parliament, which is why a new Prime Minister can take office without another nationwide vote.
Understanding this process helps explain why political transitions in the United Kingdom can appear different from those in countries with presidential systems. While the Prime Minister may change, the democratic mandate of Parliament remains in place until voters elect a new House of Commons at the next general election.
On July 21, 2026, global economic analysis shifts focus toward a defining structural macroeconomic trend: the massive expansion of public and private capital deployment into high-capacity electrical grid infrastructure. As industrial electrification, automated data center hubs, and renewable energy integration accelerate worldwide, sovereign governments and institutional investors are facing a monumental economic challenge. Updating legacy power grids to meet skyrocketing demand has emerged as a primary driver of long-term capital expenditures and industrial productivity across both developed and emerging market economies.
According to international economic policy updates released this week, grid infrastructure investments are projected to exceed multi-trillion-dollar thresholds over the coming decade. Economic planners caution that without modernized, high-voltage transmission networks, regional manufacturing sectors face severe energy bottlenecks, localized power price volatility, and operational constraints. Consequently, infrastructure spending is rapidly transitioning from passive utility maintenance into a vital component of national economic competitiveness and industrial policy.
The macroeconomic ripple effects of this capital deployment are being felt across global commodity markets and labor networks. High demand for structural industrial inputs—such as copper, aluminum, specialized electrical steel, and high-capacity transformers—has created sustained pricing support for critical material producers. Simultaneously, the specialized technical labor required to manufacture and deploy modern grid hardware is driving wage growth in industrial sectors, adding a complex new layer to central bank disinflation trajectories.
For global policymakers and strategic investors, the economics of energy grid modernization represent a double-edged sword. While massive infrastructure investment boosts short-term gross domestic product (GDP) and strengthens domestic industrial foundations, it requires disciplined fiscal allocation to prevent inflationary crowding-out of private capital. Countries that efficiently streamline grid infrastructure permitting and mobilize private investment will secure lower long-term energy costs, attracting high-tech manufacturing and reinforcing sustainable economic growth.
The international trade architecture entering the second half of 2026 is undergoing a profound structural pivot. As major sovereign economic blocs adjust to the long-term impact of unilateral tariffs and escalating regional subsidies, traditional globalized supply chains are being rapidly replaced by bilateral trade corridors and regional alliance networks. Data released in late July 2026 highlights a significant divergence: while cross-continental freight volumes between non-aligned partners have cooled, intra-regional trade throughout North America, Southeast Asia, and Eastern Europe has surged to record levels. This shift reflects a broader macroeconomic strategy wherein multinational corporations prioritize geopolitical resilience over pure cost minimization.
The primary economic catalyst behind this regionalization is the proliferation of sector-specific tariffs targeting critical industries, notably battery components, clean energy technology, and advanced semiconductor hardware. In response, global manufacturers have adopted multi-tier sourcing models that distribute production across intermediate partner nations before final assembly. While this strategy successfully bypasses primary import duties, it adds structural layers of logistical complexity and administrative oversight. Economists note that while total output remains robust, aggregate production costs have drifted upward, contributing to persistent baseline inflation across major consumer markets.
Simultaneously, currency settlement patterns within these regional blocs are experiencing a notable transformation. Sovereign central banks and commercial institutions are increasingly utilizing localized currency swap lines and digital clearing mechanisms to settle cross-border trade transactions. This transition reduces direct exposure to foreign exchange volatility and mitigates third-party liquidity constraints, further solidifying regional economic cohesion. However, for developing economies situated outside these primary trading alliances, the tightening of international trade networks presents severe challenges, restricting access to key export markets and foreign direct investment.
For corporate strategists and policy analysts navigating late 2026, success requires a thorough understanding of these emerging trade corridors. Organizations must conduct regular risk assessments of their multi-tier supplier networks, model tariff sensitivities under shifting geopolitical scenarios, and invest in real-time supply chain telemetry. As regional economic blocs strengthen their regulatory borders, supply chain agility and compliance fortitude will distinguish market leaders from vulnerable enterprises in the evolving global economy.
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