Effects of tariffs on SEC quarterly disclosures

This article was originally based on an analysis of Form 10-Q filings starting April 1, 2025 and has since been updated to reflect Form 10-Q filings through the first quarter of 2026 (‘Q1 2026’).

A key development in Q1 2026 was the February US Supreme Court ruling invalidating tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). This ruling, along with subsequent actions by the US Court of International Trade (CIT) and US Customs and Border Protection (CBP), has introduced a new phase of uncertainty for companies —particularly with respect to the potential recovery of previously paid tariffs, the implementation of replacement tariffs under alternative statutory authorities, and the overall trajectory of US trade policy.

In addition, in May, the US government issued notice of its intent to appeal the CIT's order, further contributing to uncertainty regarding the scope and timing of any potential recoveries. You can read more about this ruling and the associated accounting considerations here.

The evolving US tariff and trade policy, including any associated retaliatory tariffs, continue to present challenges to SEC registrants, affecting their business operations and financial condition. However, the nature of these challenges has shifted in Q1 2026 from escalating tariff costs to heightened legal, regulatory and accounting uncertainty related to tariff recoverability and replacement policy measures.

When the effects of tariff and trade policy – e.g. supply chain disruptions, increased costs, price fluctuations and shifts in market demand – are material or are reasonably likely to become material to a registrant, disclosure of such effects may be necessary to support investors’ decision-making needs. Increasingly, registrants are navigating both current impacts and significant uncertainty about future outcomes, signaling the need for affected registrants to provide timely, sufficient and accurate information to investors while also acknowledging the uncertainty they are facing.

We explore how registrants are navigating these challenges in their recent Form 10-Q filings, some of the associated disclosure obligations SEC registrants should be aware of, and the common disclosure themes emerging in Q1 2026.

An analysis of Q1 2026 Form 10-Q filings confirms that tariff and trade policy-related disclosures remain pervasive, but registrants are now placing greater emphasis on legal and regulatory developments—such as the potential for refunds of previously paid tariffs and the implementation of new tariffs under alternative authorities. Overall, this transition has introduced an additional layer of complexity to both financial reporting and business decision-making, requiring registrants to balance current-period transparency with forward-looking uncertainty in their disclosures.

Nearly all the tariff- and trade-related matters in registrants’ quarterly filings continue to be presented in one of the sections outlined below. These sections do not represent a complete list of sections that may be affected or required.

KPMG Observation: Assessing the risks and related effects of tariffs and changing trade policies will be a facts-and-circumstances-based analysis. Registrants are encouraged to provide disclosures that are specific to the business and provide investors the ability to evaluate the current and expected effect of tariffs ‘through the eyes of management’.

Click on the dropdowns below to learn about SEC quarterly disclosure obligations and current tariff and trade policy disclosure trends of SEC registrants.

Financial statements

Various financial reporting implications can arise due to the complexities associated with the evolving tariff and trade policy, potentially affecting multiple areas of financial reporting. We summarize key areas of financial reporting that can be susceptible to economic uncertainty, including the effects of tariff and trade policy here.

KPMG observation: While disclosures about tariff and trade policy effects continue to be more prevalent outside the financial statements, Q1 2026 filings show a significant increase in tariff-related considerations within the financial statements and related notes.

Given the US Supreme Court Ruling and subsequent actions by the CIT and CBP, registrants are increasingly evaluating whether to recognize potential refunds from the government. In practice, this has resulted in a range of outcomes. Most registrants that did disclose something on the matter have not recognized any benefit due to uncertainty regarding the timing, amount and ultimate realization of potential refunds. These disclosures often include statements indicating that recovery is not yet considered probable or realizable.

In contrast, a smaller subset of registrants has recognized receivables associated with potential tariff refunds, typically accompanied by disclosure of the basis for that conclusion and the estimated amounts recorded in the period. While currently limited in its occurrence, this represents an emerging practice.

In a very limited number of cases, registrants have also begun to receive tariff refunds subsequent to period end, with disclosures describing the nature of those receipts.

Management’s Discussion and Analysis of financial condition and results of operations

In Management's Discussion and Analysis (MD&A), a registrant is required to discuss its financial condition, changes in financial condition, and results of operations. This section of a registrant’s filing is critical for investors seeking insight into future performance and strategic planning.

In MD&A, a registrant is required to disclose information about:

uncertainties that will – or are reasonably likely to – result in its liquidity increasing or decreasing in any material way;
any known material trends, favorable or unfavorable, in its capital resources;
significant economic changes that materially affected the amount of reported income from continuing operations; or
known trends or uncertainties that have had – or it reasonably expects will have – a material favorable or unfavorable effect on net sales, revenues or income from continuing operations.

KPMG observation: Tariff-related disclosures continue to be prominent within MD&A in Q1 2026, with registrants providing both qualitative and quantitative information about the impact of tariffs on financial performance.

The focus of MD&A disclosures has evolved in Q1 2026. In addition to quantifying the impacts of tariffs, registrants are increasingly embedding tariff-related discussion across multiple components of MD&A, including results of operations, outlook and broader economic environment sections. Registrants are increasingly discussing:

the implications of the February 2026 Supreme Court ruling and related legal developments;
uncertainty regarding the availability and timing of refunds for previously paid tariffs;
the introduction of new or temporary tariffs under alternative statutory authorities; and
the broader macroeconomic implications of continued trade policy volatility.

Consistent with our previous analysis, registrants are not just acknowledging potential future impacts but are actively reporting on the actual, material effects tariffs are having on their financial results. However, disclosures increasingly distinguish between realized impacts of tariffs on current-period results and uncertainty regarding future impacts due to ongoing legal, regulatory and policy developments.

Quantitative and qualitative disclosures about market risk

The SEC’s disclosure requirements for this section of the Form 10-Q mandate that a registrant disclose the reasons for any material quantitative and qualitative changes in market risk exposures and how the registrant manages these risks.

The quantitative aspect of this obligation requires a registrant to provide detailed information on market risk factors, which can include fluctuations in interest rates, currency exchange rates, commodity prices, and other financial variables that may affect the registrant’s financial outlook.

In addition to numerical data, a registrant is required to discuss any significant shifts in its market risk exposure compared to the previous fiscal year. This involves explaining the underlying reasons for these changes, whether due to strategic decisions, changes in the economic environment, or adjustments in its risk management approach.

KPMG observation: Registrants are not generally including substantive, quantified disclosures about tariff impacts in this section of their Form 10-Q filings. For the most part, disclosures in this section continue to be high-level and qualitative, referring to tariffs as one of many potential macroeconomic risks.

Risk factors

In this section of the Form 10-Q filing, a registrant is required to discuss the most significant factors that make an investment in it or its offering speculative or risky. This includes providing a description of material risks that could potentially affect its operations and financial results.

Risk factors are required to be specific and related to matters that directly affect the registrant. Risk factors can relate to a wide array of uncertainties, from market volatility and regulatory changes to operational challenges and geopolitical tensions.

A registrant is also required to disclose any new risks or material changes to the risks previously disclosed in its last annual report (Form 10-K) or quarterly filing.

KPMG observation: As US tariff and trade policy evolves, a registrant's exposure to macroeconomic effects can significantly change. This recognition remains evident in Form 10-Q filings.

While the disclosure themes in this section of filings continue to be generally focused on uncertainty, regulatory compliance, supply chain risks, and adaptation strategies concerning changing tariff and trade policy risks, Q1 2026 filings are beginning to reflect an expanded focus on legal and regulatory uncertainty associated with tariffs.

SEC staff guidance has emphasized that a registrant’s disclosures should be updated timely as facts and circumstances and the effect of matters, like tariffs, evolve. Generic or boilerplate disclosures should also be avoided.

While common disclosure themes have emerged, these may change over time as registrants look to ensure their disclosures remain informative and useful to investors. Click on the dropdowns below to learn more about these common disclosure themes.

Economic uncertainty and risk mitigation

Economic uncertainty remains a central theme. In Q1 2026, this uncertainty is increasingly driven by legal and regulatory developments, particularly the invalidation of certain tariffs and the uncertainty surrounding replacement measures and refund processes.

Registrants are providing more detailed descriptions of how this uncertainty is affecting their business by explaining the specific ways tariff-related uncertainty is impacting performance, such as:

variability in input costs and supplier pricing;
changes in customer purchasing behavior or demand patterns;
challenges in forecasting financial performance; and
disruptions or adjustments within global supply chains.

Registrants are also describing both ongoing and incremental mitigation measures, such as cost management initiatives, pricing adjustments and supply chain adjustments.

At the same time, disclosures frequently acknowledge that mitigation strategies may only partially offset the effects of tariffs, particularly in the near term, and that the effectiveness of these actions remains uncertain in a rapidly evolving policy environment. As a result, many registrants state that they are continuing to monitor developments and may adjust their strategies as conditions change.

Increased costs and financial impacts

Disclosures continue to increasingly include quantified information about the financial effects of tariffs. In Q1 2026, registrants are providing more detailed explanations of how tariffs are affecting specific line items within their results of operations, particularly cost of sales, gross margin and operating income. It is increasingly common for registrants to:

quantify the magnitude of tariff-related cost increases within the period;
describe how those costs have contributed to margin compression or changes in profitability; and
explain the extent to which these impacts were offset by pricing actions, cost recovery mechanisms or operational improvements.

Disclosures also more frequently explain the timing of these impacts. For example, some registrants disclose that cost increases may be recognized immediately, while pricing actions or customer recoveries occur with a lag.

In addition, some registrants are presenting tariff impacts on a net basis, describing both gross tariff-related cost increases and expected or realized offsets, such as customer recoveries, supplier negotiations or anticipated refunds. Where multiple offsetting factors exist—including pricing actions, cost mitigation, and potential refund-sharing arrangements—clear articulation of how these elements interact may be important to provide a complete view of the financial effects.

Some registrants disclose that the economic benefits of tariff refunds may be partially or fully passed through to customers, particularly where contractual pricing mechanisms or customer arrangements require such treatment. As a result, the ultimate financial benefit of tariff refunds may differ from the gross amounts recovered, depending on contractual terms and commercial arrangements.

Operational challenges and supply chain disruptions

Disruption in supply chains remains a recurring theme. Registrants are acknowledging material effects to their supply chain and future effects that are reasonably likely to occur. In addition to acknowledging these current and future effects, some discuss how they are trying to mitigate current or anticipated supply chain disruptions – e.g. supply chain adjustments, alternative sourcing and manufacturing reconfigurations.

Strategic planning and adaptation

Registrants are outlining strategic initiatives to adapt to longer-term changes in tariff exposure and trade policy uncertainty. Some examples include disclosures about efforts to diversify suppliers and modify business models to reduce exposure to tariffs.

In Q1 2026, these strategies increasingly reflect efforts to navigate an uncertain and rapidly evolving trade policy environment, including actions taken to respond to potential tariff refunds and replacement tariffs.

Regulatory compliance, including legal and policy transition uncertainty

Regulatory compliance remains a key concern, with registrants continuing to highlight the operational and financial burden of complying with evolving tariff rules. However, a new and prominent theme in Q1 2026 filings is the uncertainty arising from the transition in US tariff policy following the invalidation of tariffs imposed under IEEPA. Registrants are highlighting challenges associated with navigating a rapidly evolving trade policy landscape characterized by:

uncertainty about the scope, duration and implementation of replacement tariffs;
the potential for additional legal challenges or policy changes; and
limited visibility into the timing and amount of potential tariff refunds.

This transition has introduced additional complexity into both operational decision-making and financial reporting.