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As of this writing, the Persian Gulf is still not open, and future prospects are still cloudy, with the U.S. and Iran alternating between war and diplomacy. Eventually, the situation will be resolved, but achieving low energy costs will take that much longer. Even after the Gulf reopens for tanker traffic, it will take time for both shipping patterns and inventories to be restored. There is also the possibility of further blowups in the region disrupting prices for an extended period. However, with the West Texas Intermediate crude oil price currently around $90 per barrel, it appears the extreme price spikes some analysts have feared may not come to pass.
The White House is preparing to shift tariffs to a new basis of authority: Section 301. After the Supreme Court ruling invalidating use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, the White House adopted a 10% global tariff under the authority of Section 122 of the 1974 Trade Act. However, this will expire on July 24. The administration is beginning to shift new tariff proposals to Section 301, which allows tariffs on foreign countries that engage in unfair, unjustifiable, or discriminatory trade practices. In June 2026, the U.S. Trade Representative investigated 60 countries and concluded that they fail to effectively prohibit or enforce bans on imports made with forced labor and therefore tariffs between 10% and 12.5% are justified under Section 301. Previous tariffs on steel, copper and motor vehicles still stand, however, as they were already imposed under Section 301 to begin with.
The cost of ocean shipping from Asia to the West Coast will peak at $6,000 per container this month as the pre-Christmas holiday shipping period starts earlier this year. Shippers are trying to beat the uncertainty of any future tariff increases after the July 24 expiration of the current duty regime. Container rates will then drop quickly after a fairly short peak period.
Diesel prices are beginning to come down, though they remain very high at over $5.00 per gallon, on average. The cost of shipping by truck will also begin to ease, though rates will remain elevated for a while. Similarly, the cost of air freight will remain high as long as jet fuel costs are.
Labor costs continue to ease, but slowly. Private industry compensation cost increases ended March 2026 at 3.4% over the previous twelve months, and will likely slow as hiring remains muted. However, the rise in gasoline prices will cause cost-of-living wage adjustments to reverse some of this easing later. Production workers’ wage growth should stay a bit higher, as slowing immigration reduces labor supply for these typically blue-collar jobs. The construction, agriculture, retail, and leisure and hospitality industries will be most affected by possible labor shortages because of their reliance on immigrant workers.
Expect borrowing costs to rise a little because of expectations that the Federal Reserve will not cut interest rates any more amid the pickup in inflation driven by energy prices. There is also uncertainty about how that burst of inflation will affect the economy, so financial markets are expecting that the Fed may actually raise short-term rates later this year. Most materials costs remain subdued, but continue to be high for metals, because of tariffs, and anything petroleum-related, such as plastics, chemicals and fertilizer. Electronics components prices have escalated because of the artificial intelligence push by tech companies, and should continue to be in high demand. There are currently shortages of some components
