Trump tariffs and financial reporting: Considerations for audit and risk committees

Increasing tariffs and global trade uncertainty may have significant financial reporting effects for entities. There are numerous accounting implications across multiple areas such as going concern assessments, judgements and estimates, impairment of non-financial assets, etc. This article explores many of these implications for entities both directly and indirectly affected.

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VARIOUS governments have stated an intention to increase tariff rates on a wide variety of imported goods and/or services with Donald Trump taking the lead to announce a very significant scheme of tariffs on imports. This has prompted exporters and importers around the world to think through the possibility of other jurisdictions introducing similar tariffs.

The tariffs proposed by the US government now have an implementation period of three months during which period the affected jurisdictions are expected to renegotiate the terms and conditions. The US action of introducing the new tariffs is primarily to address the unprecedented level of trade deficit experienced by the US. This could probably trigger some of the other jurisdictions also following suits to introduce new tariff structures to address their trade deficits.

These conditions of possible levying of tariffs on the imports are bound to create conditions of significant uncertainty about the timing of levies and how long these policies will endure. Due to this uncertainty, and the complex nature of international supply chains, the operational and financial effects of tariffs on entities are challenging to predict. This uncertainty results in numerous accounting implications such as impairment of financial and non-financial assets; going concern; significant judgements, estimates and estimation uncertainty and others.

The Governing Boards and Board Sub Committees, such as Audit and Risk Committees, of entities will have an enhanced role to play in assessing the consequences and in ensuring appropriate accounting and reporting in order for the users of financial statements to make economic decisions. This article attempts to discuss some of these implications and considerations for Governing Boards and Committees of entities when preparing annual and interim financial statements in accordance with IFRS Accounting Standards in 2025.