Impact of tariffs on inflation in the United States to face examination in new data release

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The ongoing US-China trade war, political tensions, and economic challenges continue to dominate headlines around the world. Here's a roundup of some key developments:

US-China Trade War and Inflation

The US-China trade war remains active, with a temporary tariff truce extended to November 10, 2025. Despite the truce, effective tariff rates remain significantly elevated compared to pre-2018 levels. The ongoing trade tension has caused two notable macroeconomic impacts on global inflation.

In the United States, although tariffs increased sharply in early 2025, inflationary pressures due to tariffs have been surprisingly muted. US headline Consumer Price Index (CPI) growth has been moderate, with import prices rising modestly. Much inflation in the US now comes from sectors unaffected by tariffs, such as services, healthcare, food, and fuel.

In the Euro area, redirected Chinese exports initially meant for the US due to tariffs are increasing supply and exerting downward pressure on prices. This redirection could reduce Eurozone inflation rates by around 0.15 percentage points in 2026, as cheaper Chinese imports enter European markets.

US Political Tensions

US President Donald Trump has expanded his search to replace Federal Reserve Chair Jerome Powell. The standoff between Trump and Powell has global implications, with questions being raised about the independence of the US central bank and its ability to make decisions based on economic conditions rather than political pressures.

Trump's global tariffs kicked in, reshaping international commerce by instituting levies on imports from friend and foe alike. The protectionist move pushed the effective US tariff rate to its highest level since World War II. Trump's post towards Intel's CEO led to a drop in the company's shares.

International Conflicts

Israel is expected to approve a new plan to take over Gaza aimed at completely destroying Hamas and securing hostage releases. The move has been met with condemnation from the EU, China, and Britain, among others.

US President Donald Trump may see the limits on chip exports as a bargaining chip to get a summit with China's leader Xi Jinping. The US President Donald Trump extended a trade truce with China for 90 days.

The operation to secure Venezuela's presidency could take up to five months and would involve a phased effort involving military operations and increased humanitarian support. The US doubled its bounty for Venezuelan President Nicolás Maduro's arrest to $50 million.

Economic Challenges

The losses and budget cuts at the IRS could impact the agency's ability to operate as usual during tax season. The decision to lower rates comes as the UK economy continues to struggle: Inflation remains high, unemployment rose last quarter, and GDP shrank in April and May. The Bank of England cut interest rates by a quarter point to 4% after a historic split among the Monetary Policy Committee required a second vote, indicative of the uncertainties plaguing a flagging UK economy.

Traders are increasingly betting that the Federal Reserve will cut interest rates in September. Economic problems, a demanding work culture, and a patriarchal society are among the reasons experts give for the decline in Japan's population. The government has tried to boost birth rates, with little success.

Scientific Advancements

A preliminary study of more than 15,500 people has revealed possible genetic clues to myalgic encephalomyelitis/chronic fatigue syndrome. The study uncovered eight genomic regions associated with ME/CFS, including some that overlap with or are near genes involved in immune function. The results provide "validation of ME/CFS as a biomedical condition."

Other Developments

The BRICS group of nations has coalesced into a tighter alliance in the face of Washington's tariff threats. The BRICS group has expanded recently, adding more than a dozen nations in the last year. Elon Musk said he would take legal action against Apple and OpenAI, accusing them of favoring OpenAI over rivals.

Mexico's President Claudia Sheinbaum said any US military presence on Mexican soil to combat drug cartels is "absolutely off the table." China urged domestic companies to avoid buying Nvidia's H20 chips, claiming they are of poor quality and may pose security threats.

The US consumer price index rose by 0.3% in June and economists predicted a similar rise in July. Germany said it would pause exporting military equipment to Israel that could be used in the Gaza Strip. The Israeli plan to take over Gaza was met with condemnation from the EU, China, and Britain, among others.

The Edinburgh Fringe venues canceled acts by two Jewish comedians, citing concerns related to the war in Gaza. Contenders for the role of US ambassador to Iceland include St. Louis Fed President James Bullard and former economic adviser to President George W. Bush, Marc Sumerlin.

The Bank of England also marginally raised its growth forecast for the year to 1.25%, up from 1%, while also predicting higher inflation. The US President Donald Trump will meet with his Russian counterpart Vladimir Putin potentially as early as next week.

Impact of tariffs on inflation in the United States to face examination in new data release