Trade Relief Collides With Rising Oil Costs

Key Takeaways

-GM expects a $500 million tariff refund, while UPS has started processing tariff refunds for customers.
-The US tariff framework has shifted from IEEPA to Section 122, changing how future trade costs may apply.
-Brent crude moved above $111, keeping energy-driven inflation pressure alive.
-Autos, logistics and retail face mixed effects from tariff relief and higher oil costs.
-Markets are watching tariff lawsuits, Hormuz shipping recovery and new Section 301 investigations.

Markets are facing two opposing forces. Corporate America is starting to receive tariff relief, but energy costs are rising as Hormuz disruption keeps oil elevated.

For companies, the earnings impact is mixed. Tariff refunds can support margins, while higher oil prices raise freight, fuel and input costs. That makes sector reactions less straightforward.

Tariff Relief Supports Corporate Margins

The tariff landscape changed after the Supreme Court ruled that IEEPA does not give the President authority to impose tariffs. The administration replaced the levies with a 15% flat tariff under Section 122.

Section 122 tariffs are limited to 150 days, require congressional approval to extend, and apply more broadly than targeted bilateral tariffs.

For GM, the refund helps, but does not remove the full cost burden. The company expects a $500 million refund, while still facing $2.5 billion to $3.5 billion in tariff expenses for 2026.

Oil Shock Keeps Inflation Pressure Alive

Oil is moving in the other direction. Brent crude moved above $111 as Strait of Hormuz disruption kept energy supply under pressure.

Before the conflict, around 129 vessels crossed the strait each day. Last Sunday, only eight did. That drop keeps fuel, freight and petrochemical costs elevated.

For import-heavy sectors, higher energy costs can quickly absorb part of the margin benefit from tariff relief.

Autos, Logistics And Retail Face Mixed Pressure

Autos, logistics and retail sit at the centre of this tension. Automakers may benefit from tariff refunds, but still face higher energy and input costs. Logistics firms are exposed to freight and air cargo costs. Retailers may see margins squeezed by transport inflation and residual tariff exposure.

Three Market Risks To Watch

The next quarter depends on three variables:

1) Whether Section 122 tariffs survive legal challenges.
2) How quickly Hormuz shipping normalises.
3) Whether Section 301 investigations bring new sector-specific tariffs later this year.

Explore how tariff relief, oil prices and sector risks are shaping market opportunities.