{"id":49134,"date":"2026-05-01T10:14:00","date_gmt":"2026-05-01T02:14:00","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=49134"},"modified":"2026-05-01T10:14:00","modified_gmt":"2026-05-01T02:14:00","slug":"when-trade-relief-meets-an-energy-shock","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/featured\/when-trade-relief-meets-an-energy-shock\/","title":{"rendered":"When Trade Relief Meets an Energy Shock"},"content":{"rendered":"\n
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The refunds are real. So is the price of oil.<\/strong><\/figcaption><\/figure>\n\n\n\n

General Motors (GM) is expecting a $500 million tariff refund<\/a>. UPS has started processing refunds for customers after collecting roughly $5 billion in tariffs<\/a> on their behalf. For corporate America, the era of sweeping emergency-power tariffs is legally over, and financial damage might find relief.<\/p>\n\n\n\n

But that story is running into a harder one. Brent crude (UKOUSD) crossed $111 a barrel this week, up 13 per cent in seven days, with prices still climbing despite Iran’s proposal to reopen the Strait of Hormuz. Trade cost relief and an energy-driven inflation shock are now moving in opposite directions at the same time, and markets have to price both simultaneously.<\/p>\n\n\n\n

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How the tariff landscape shifted<\/strong><\/h2>\n\n\n\n

In February, the Supreme Court ruled that the International Emergency Economic Powers Act does not give the President authority to impose tariffs. The administration responded within hours \u2014 replacing the struck-down levies with a 15 per cent flat tariff on all imports under Section 122 of the Trade Act of 1974.<\/p>\n\n\n\n

The change in legal architecture matters as much as the rate. Section 122 tariffs are time-limited to 150 days, require congressional approval to extend<\/a>, and are non-discriminatory by design \u2014 they cannot easily be used as bilateral bargaining chips the way IEEPA tariffs were.<\/p>\n\n\n\n

The administration has also launched new Section 301 investigations into manufacturing overcapacity across several major economies, flagging that sector-specific tariffs are the likely next phase.<\/p>\n\n\n\n

For importers, the current picture looks like this:<\/p>\n\n\n\n

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The refund numbers are real, but context matters. GM’s $500 million sits against $3.1 billion in tariff costs it reported last year \u2014 the company still expects $2.5 to $3.5 billion in tariff expenses for 2026<\/a> after the refund. The legal architecture has changed. The cost burden on earnings has not disappeared.<\/p>\n\n\n\n

Oil is in another direction<\/strong><\/h2>\n\n\n\n

The IEA has described the Strait of Hormuz closure<\/a> as the largest supply disruption in the history of the global oil market. Before the conflict began in late February, an average of 129 vessels crossed the strait each day. Last Sunday, only eight vessels did<\/a>.<\/p>\n\n\n\n

Saudi Arabia and the UAE have rerouted some supplies through overland pipelines, and a coordinated release of strategic reserves has helped prevent the worst-case price scenarios. But Brent (UKOUSD) above $110 is still a significant inflation input for any economy running import-heavy supply chains. Jet fuel, freight costs, and petrochemical inputs are all moving up with it.<\/p>\n\n\n\n

The sectoral effects are already showing:<\/p>\n\n\n\n