- within Government and Public Sector topic(s)
WHAT HAPPENED
As discussed in our trade group's February 23 post, the Supreme Court struck down the Trump Administration's tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. The Trump administration has responded with a patchwork of stopgap measures to replace portions of the invalidated tariffs, resulting in further uncertainty.
While the decision clearly invalidated the IEEPA tariffs, the post discusses a number of issues that remain unresolved, including:
- The availability of, and the process for obtaining, refunds.
- The timing, duration and validity of replacement tariffs.
- The availability of other tariff authorities.
TAKEAWAYS
Whether in connection with filing of an annual Form 10-K or quarterly Form 10-Qs, public companies should consider the materiality of tariffs, including:
Risk factors and forward-looking statement disclaimers
The volatility and magnitude of current tariff uncertainties may warrant increased prominence for some companies, including:
- Uncertainties relating to potential refunds or claims under commercial contracts
- Potential liability risk for importers of record that passed on costs of invalidated tariffs to counterparties or customers
- Risks tied to future executive or legislative trade actions, including questions as to the validity of proposed 15% tariffs
- Uncertainties in timing or amount of changes in cost of goods or pricing
- Supply chain, sourcing and logistics risks
- Potential renegotiation of international trade agreements, reciprocal tariffs imposed by other countries on U.S. goods, and the impact on current negotiations, including with China
- Possible shifts in competitive dynamics
- Uncertainties for changes in market access
- Uncertainty for future capital expenditures or investment, or on valuations of companies seeking capital, pending clarity on global trade prospects.
MD&A
Companies are required to discuss material events and uncertainties known to management that are reasonably likely to have a material effect on future results or operations. Topics related to the changing tariff environment could include:
- Effects on cost of goods pricing, inventories and related uncertainties, including potential timing and magnitude
- Plans or expectations for any refund claims or adjustments under commercial contracts
- Expectations or uncertainty regarding the duration or validity of any replacement tariffs
- Impact on guidance or outlook disclosure
Non-GAAP financial measures
Companies should consider Non-GAAP issues in connection with adjustments to disclosure for tariffs.
Financial statements
Companies should consult with their accountants on relevant effects, including:
- Inventory values and earnings estimates
- Contingent assets
- Treatment of any reserves for expected tariff obligations
- Financing for customs bonds
- Treatment of previous asset impairments
- Potential refund claims
Governance and strategy
Whether any changes in strategy are imminent, such as:
- Opportunities to re-source or re-shore or otherwise mitigate tariffs through alternative sourcing or manufacturing
- Potential to allocate tariff costs to counterparties under contract provisions, including pricing, force majeure, change in law and hardship clauses.
- Diversification of suppliers,
- Hedging or operational shifts
For additional information on tariff considerations, please see our April 8, 2025 post and our July 23, 2025 post.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
