Key points
- The US Supreme Court on 20 February 2026 issued its decision that the US import tariffs imposed in 2025 by executive orders pursuant to the International Emergency Economic Powers Act (IEEPA) were imposed without statutory authority.
- This decision invalidates only the tariffs imposed under IEEPA; numerous other tariffs previously imposed and imposed in 2025 under different statutes remain in force.
- Groups with entities (importers of record) operating in and importing certain goods and services into the United States need to consider whether the decision gives rise to an asset for tariffs previously paid by those entities.
- It is unlikely that the recognition criteria for an asset in respect of any potential recovery would be met at the reporting date. However, entities should provide appropriate disclosure in their financial statements to the extent material.
What is the issue?
In February and April 2025, the US Government had imposed a number of import tariffs pursuant to emergency powers under the International Emergency Economic Powers Act (IEEPA) (the ‘IEEPA tariffs’).
The legality of the IEEPA tariffs was challenged by a number of small businesses and US States, and the case was ultimately heard by the US Supreme Court, which has issued its decision on 20 February 2026.
The Supreme Court’s ruling clarifies the legal foundation for tariffs imposed pursuant to national emergency declarations and constrains the executive branch’s ability to rely on IEEPA as a standalone basis for tariff authority. The decision effectively eliminates IEEPA as a standalone tariff authority, significantly altering the legal foundation for existing IEEPA-based tariffs and limiting the administration’s flexibility and speed in pursuing future tariff actions.
The Court did not provide extensive guidance on the retroactive consequences of its ruling, leaving potential uncertainty regarding refund claims to the lower courts to resolve.
This raises questions regarding the accounting treatment of any potential recovery of tariffs previously paid.
Who is affected?
IFRS preparers that might be affected include groups with entities that are importers of record into the United States.
This decision also could have broader impact beyond importers, particularly on entities whose pricing, margins, or contractual arrangements incorporated IEEPA tariff costs. Entities need to consider contractual arrangements that could also be impacted by the US Supreme Court decision.
Should an asset currently be recognised for the potential recovery of the tariffs previously paid?
Following the invalidation of the IEEPA tariffs, entities need to consider whether a right to recover tariffs exists and if so, if the previously paid amounts give rise to an asset that should be recognised.
There might be judgement to be applied as to the appropriate accounting guidance. In addition, because there is also currently legal uncertainty about the process, timing and enforceability of any reimbursement or relief payments, whether in part of in full, it is highly unlikely that the relevant recognition threshold for an asset is met. Disclosure of the ruling and potential impacts should be provided to the extent material.
What are the disclosures that an entity should provide in their financial statements?
Entities should consider disclosing:
- the nature of the US Supreme Court decision;
- the uncertainty surrounding the timing and amount of any potential recovery; and
- the amounts of tariffs paid and potentially affected, where such amounts are material.
