Financial Reporting Considerations for Tariffs
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On February 20, 2026, the U.S. Supreme Court overturned President Donald Trump’s global tariffs imposed throughout 2025 under the International Emergency Economic Powers Act (IEEPA). However, the Supreme Court did not address whether the government must return that revenue, nor did it outline any mechanism or timeline for potential refunds. In response to the Supreme Court ruling, the administration announced that it would pivot to alternative statutes to reinstate the tariffs. The President issued executive orders directing agencies to terminate IEEPA tariff collection “as soon as practicable,” continue the suspension of de minimis treatment, and through a separate Proclamation impose a replacement 10% global tariff under Section 122 of the Trade Act of 1974, to be increased to 15%. See BDO’s publication, Supreme Court Invalidates IEEPA Tariffs, Administration Replaces With New Surcharge: What Importers Need to Know, for more information.
As a result of the continuing uncertainty surrounding tariffs and potential refunds, stock prices of U.S. publicly traded entities have fluctuated, sometimes dramatically. Entities in the retail and consumer markets, manufacturing and distribution, technology, and construction industries might continue to experience significant risk and volatility. Changing tariffs and market fluctuations may expose entities to new risks, including disruptions to supply chains and increased production costs. Shifting consumer demand also can affect entities’ financial projections and asset valuations. As a result, the direct and indirect effects of tariffs and the ensuing economic uncertainty and market volatility can affect financial performance in a variety of ways.
This publication discusses key accounting, SEC reporting, and auditing considerations with respect to the effects of tariffs and the resulting economic uncertainty, including the following:
- Revenue recognition
- Impairment of nonfinancial assets (such as goodwill, intangible assets, and inventory)
- Income tax accounting
- Potential refunds (added March 2026)
- Disclosures about subsequent events and risks and uncertainties
- SEC reporting considerations (for example, with respect to the description of the business, risk factors, MD&A and quantitative and qualitative disclosures about market risks, and items that might trigger reporting on Form 8-K)
- Non-GAAP measures
- Internal controls over financial reporting
- Auditing considerations (including the effects on the risk assessment process, obtaining sufficient appropriate audit evidence and the audit report)
- Corporate governance and shareholder considerations
Download our publication for more guidance on these topics.