Tariffs will trigger SEC Disclosure Obligations

In February 2025, President Trump signed an executive order that imposes tariffs on imports from Mexico, Canada, and China. In May 2025, the Court of International Trade granted a permanent injunction on the tariff orders nationwide.[1] The Trump administration filed an emergency appeal of that decision to the U.S. Court of Appeals for the Federal Circuit, which stayed the injunction pending further briefing.[2]

Therefore, when preparing to file Form 10-Qs, companies should disclose how tariffs will impact or have already impacted their business in the Management’s Discussion and Analysis (MD&A) section. The SEC stated, “if the registrant knows of events that will cause a material change in the relationship between costs and revenues, the change in the relationship must be disclosed.” This includes known future increases in costs of labor or materials or prices increase or inventory adjustments.

In the MD&A section, companies should consider disclosing: (1) any effect on their operations, liquidity and capital resources, (2) any changes to manufacturing locations or raw materials, (3) any trends, events, uncertainties that would reasonably be likely to have a material effect on the company’s financial condition. 

Companies should also be aware of a heightened risk of misstatements when it comes to reporting about tariffs to avoid misleading investors.
 

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