Tariff Disclosures After IEEPA Supreme Court Ruling 2026
The IEEPA tariff saga is the biggest trade-policy disclosure event of 2026 so far. After lower courts ruled against the administration in May 2025, the Supreme Court — on February 20, 2026 — held 6-3 that the International Emergency Economic Powers Act does not authorize the President to impose broad tariffs. Companies preparing 10-Ks and 10-Qs since that ruling face a new disclosure landscape, and SEC guidance is now explicit about what investors expect to see in tariff disclosures.
At SW Accounting & Consulting Corp, we work with importers, manufacturers, and consumer-products companies for whom tariffs are no longer a footnote item. Deloitte’s April 2026 Financial Reporting Spotlight quantifies the disclosure shift among Fortune 500 filers — and SEC speeches lay out the specific MD&A content the staff is looking for. Here’s the practical guide.
What did the Supreme Court rule on IEEPA tariffs? ⚖
On February 20, 2026, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not authorize the President to impose broad tariffs — invalidating the IEEPA-based tariff orders issued since February 2025.
The procedural history matters for disclosure purposes:
- February 2025 — President Trump issued executive orders imposing tariffs on imports from several countries, with varying rates under IEEPA.
- May 2025 — A coalition of states and small businesses sued, arguing IEEPA does not authorize broad tariff orders. Lower courts ruled for plaintiffs in two cases, rulings upheld on appeal.
- September 2025 — The administration sought expedited Supreme Court review.
- November 2025 — Oral arguments before the Supreme Court.
- February 20, 2026 — Supreme Court ruled 6-3 that IEEPA does not authorize the tariff impositions.
Approximately 25% of Fortune 500 companies filed their annual reports after the ruling, with about 15% of that group disclosing the court ruling itself. Deloitte expects significantly more disclosure in 2026 quarterly reports — meaning Q1 2026 10-Qs (May–June filing window) and Q2 10-Qs are where the practical disclosure work shifts.
How prevalent are tariff disclosures among Fortune 500 filers? 📊
95% of Fortune 500 companies disclosed tariff-related matters in their latest annual reports (up from 84%), with MD&A nearly doubling — from 33% to 62% — reflecting the operational impact of IEEPA tariffs throughout 2025.
| 10-K Section | 2025 Filings | 2024 Filings |
|---|---|---|
| Risk Factors | 98% | 88% |
| MD&A | 62% | 33% |
| Business | 31% | 26% |
| Financial Statements | 15% | 11% |
The MD&A jump is the headline. Tariffs went from a Risk Factor footnote to a material trend that materially affects costs, supply chains, and customer pricing decisions — and registrants are responding by elevating the topic into MD&A’s “results of operations” and “known trends” sections.
What does the SEC want to see in tariff MD&A disclosures? 🎯
CorpFin Chief Accountant Heather Rosenberger laid out a six-element framework: magnitude, mitigation, recovery, profitability/financial condition/liquidity effects, impairment exposure, and known trends or uncertainties.
Specific disclosures that the SEC has flagged as appropriate for MD&A include:
- Magnitude of risk. What dollar exposure does the company have to tariff-impacted imports? Is it 5% of cost of goods sold? 30%? Quantify or describe the order of magnitude.
- Mitigation ability. What steps has the company taken — supplier diversification, near-shoring, alternative sourcing, hedging — and how effective are those measures?
- Recovery ability. Can the company pass costs through via pricing? What’s the historical price-pass-through experience? Are customer contracts indexed to commodity costs?
- Profitability, financial condition, liquidity effects. How are gross margins, operating margins, working capital, or cash flow affected?
- Impairments, credit losses, or other expenses. Are inventory write-downs, fixed-asset impairments, or customer credit losses reasonably possible or probable?
- Known trends or uncertainties. Per FRM paragraph 9240.1, material trends affecting future operations must be disclosed. Tariff trajectories — including the IEEPA ruling and any successor administrative actions — squarely qualify.
The SCOTUS ruling creates an interesting disclosure question: do you treat the invalidated tariffs as a non-recurring event, or does the underlying trade-policy uncertainty persist? In our practice, we recommend disclosing both — the historic financial impact of IEEPA tariffs while they were in effect, and the forward-looking uncertainty around successor administrative or congressional action under different statutory authority (e.g., Section 232, Section 301).
Should tariff costs be presented as non-GAAP adjustments? ⚠
No. Tariffs are typically recurring costs paid in cash and treated as operating expenses — making non-GAAP adjustments for tariffs and related costs generally inappropriate per SEC staff guidance.
Several Fortune 500 filers initially considered or proposed “tariff-adjusted” non-GAAP measures during the IEEPA tariff implementation. The SEC’s view, articulated by Rosenberger and consistent with longstanding Reg G principles, is that:
- Tariff costs are recurring while in effect.
- They are paid in cash.
- They flow through operating expenses, not below-the-line items.
Companies that quantified tariff impacts in MD&A — without making them non-GAAP adjustments — were broadly viewed favorably. Quantification helps investors model the underlying economics; non-GAAP exclusion would obscure them.
For 10-Qs filed after February 20, 2026: (1) describe the SCOTUS ruling and its retrospective and prospective impact, (2) quantify any tariff cost reversal or recovery, (3) address whether successor tariff regimes (under different statutes) are likely, (4) update cash flow and liquidity discussion if tariff payments materially affected working capital. Don’t bury the SCOTUS ruling — many investors care about the impact on margins and capital allocation.
What practical disclosure moves should preparers make now? ✅
- Update your tariff Risk Factor. Acknowledge the February 20, 2026 SCOTUS ruling. Address whether the company expects successor administrative action under Section 232, Section 301, or congressional tariff statutes.
- Quantify in MD&A. Move tariff impact discussion from vague qualitative language to quantified estimates (cost-of-sales impact, gross margin compression in basis points, FX sensitivity).
- Address the six-element framework. Magnitude, mitigation, recovery, financial-statement effects, impairment risk, known trends.
- Avoid tariff non-GAAP adjustments. Discuss tariff impact in plain GAAP and MD&A — don’t strip it out of EBITDA or “adjusted” earnings.
- Coordinate with audit on impairment. If tariffs caused inventory or fixed-asset impairment indicators in 2025, ensure your Q1 2026 update reflects any reversals or continuing concerns.
Frequently Asked Questions 🗂
For SEC speeches and disclosure guidance, see sec.gov/news. The Financial Reporting Manual (FRM) paragraph 9240.1 provides the authoritative reference for “known trends and uncertainties” disclosure. The Supreme Court’s IEEPA decision is available on the Supreme Court opinions page.
Need help drafting tariff-related MD&A, addressing impairment indicators, or coordinating with audit on tariff refund accounting? SW Accounting & Consulting Corp’s SEC reporting team supports filers across these issues — book a consultation.
