Tariff Ruling Upends Accounting for Companies’ Year-End Reports

The Supreme Court ruling that overturned a suite of tariffs on foreign goods has handed corporate accountants extra work as they polish off year-end reports detailing the toll of higher trade costs on corporate earnings and asset values.

The high court on Friday rejected President Donald Trump’s use of emergency powers to enact sweeping levies on imported products and materials. The ruling lands in the middle of corporate earnings season, however, and many companies have yet to submit audited financial statements detailing their 2025 performance.

Corporate accountants still preparing annual financial reports due to the US Securities and Exchange Commission next month will have to scramble to make sure the information is still accurate. The ruling is expected to trigger fresh disclosures detailing the potential ramifications for companies that grappled with a sudden markup for imported goods and materials.

With trade costs potentially alleviated, companies also will have to consider possible updates to cash flow projections that underpin inventory values along with earnings estimates.

“The timing is really putting a lot of these finance departments in a bind,” said Bob Michaels, partner and national technical accounting lead with CrossCountry Consulting.

US listed companies face strict deadlines to meet SEC reporting requirements, with companies up against March due dates to file their annual reports. Those with pending submissions could opt to delay their filing to take more time to incorporate any fallout from the ruling.

It’s not clear if the SEC plans to provide any guidance or relief to companies that were putting the final touches on their annual reports as the decision was handed down. The SEC declined to comment Friday.

Lingering Impact

The administration’s tariff policy extracted $289 billion in revenue last year, according to the Bipartisan Policy Center, which seeks to build consensus for intractable policy issues like curbing federal debt.

Those collections added to the cost of businesses’ inventory, put a dent in operating income, and hurt profit margins.

They also triggered charge-offs, like Hasbro Inc.’s $1 billion write down for the goodwill value of its consumer products segment. Such impairments can’t be reversed under US accounting rules, even if cash flows and other conditions improve.

Performance guidance that companies typically offer to investors could shift as companies weigh a new set of scenarios including a possible refund and the chance that the administration would impose replacement levies.

“The story may not be over,” said Andrew Siciliano, a KPMG LLP partner and the firm’s global practice leader for trade, customs, and tax. “Open questions also remain, such as how the refund process will work now and how refunds will be issued.”

The value of any possible refunds wouldn’t show up yet in the audited financial statements for companies wrapping up their year-end reporting. But firms facing significant financial shifts would likely include a footnote discussing the potential ramifications.

Companies aren’t required to have a complete understanding of the accounting impact yet, said Sergey Kvasnyuk, a director with Highspring and a technical accounting adviser.