Canada’s IFRS Accounting Standards Discussion Group recently discussed the following only-in-Trump-World scenario:

• …the U.S. Supreme Court ruled on February 20, 2026, that the U.S. International Emergency Economic Powers Act (IEEPA) does not provide the executive branch of government with the authority to impose tariffs. The ruling invalidated tariffs U.S. President Donald Trump imposed in April 2025 under the IEEPA on goods from Canada, Mexico, and China, as well as other global and country-specific tariffs. The ruling also invalidated the potential for tariffs in accordance with executive orders related to Venezuela, Russia, Iran, Brazil, and Cuba. The Supreme Court did not decide whether, and to what extent, importers may claim refunds of IEEPA tariffs already paid. 
• On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (CBP) to progress with the IEEPA tariffs refund process, noting… that “all importers of record whose entries were subject to IEEPA duties are entitled to the benefit” of the Supreme Court ruling that tariffs imposed under the IEEPA are unlawful.
• …According to the CBP IEEPA Duty Refunds webpage, on April 10, 2026, CBP announced that Phase 1 of the (refund) functionality would be operational…on April 20, 2026, enabling the processing of IEEPA duty refunds for entries that are either still open and not finalized (unliquidated) or have been finalized within the past 80 days. 

The IDG considered whether it’s appropriate to recognize an asset as at a March 31, 2026 reporting date for potential tariff recoveries. Such recognition might be appropriate if one takes the view that the Supreme Court decision, together with subsequent developments up until March 31, provide a sufficient legal basis to conclude that entities have obtained a right to a refund of tariffs previously paid; if so, the entity should recognize an asset when it is probable that economic benefits will flow to the entity and the amount can be measured reliably. Alternatively, one might take the view that the Supreme Court decision, on its own, doesn’t establish a sufficiently clear and enforceable right to a refund of tariffs previously paid: as at March 31, 2026, the Court hadn’t ruled on refund entitlements, and further judicial and administrative steps remained ongoing. From this perspective, the tariff relief might be regarded as a contingent asset, the existence of which will be confirmed only by the occurrence or non‑occurrence of one or more uncertain future events. In this case, the asset isn’t recognized until the inflow of economic benefits becomes virtually certain.

Most group members took the latter view, regarding the relief as a contingent asset. Some members did think the relief should be assessed using a probability threshold – however, these Group members noted that significant uncertainty existed as at March 31, 2026, making it difficult for entities to conclude that they met the recognition threshold even under this approach. Regardless of the approach applied, Group members emphasized the importance of providing clear, entity-specific disclosures about the approach used, key assumptions, and how the tariff-refund process affects the entity.

The group also noted that entities may have capitalized IEEPA tariffs as part of the initial cost of assets, such as inventory or property, plant, and equipment. Generally, it would be most appropriate for entities to record tariff recoveries in the same way they originally recorded them. Therefore, entities would account for recoveries for tariffs originally recorded in inventory as a reduction (i.e., credit) to the cost of the related inventory if still on-hand, or to cost of goods sold if the inventory has been sold to customers. For PP&E the recovery would be recognized as a reduction to the cost basis. The group noted that other approaches may also be acceptable based on specific facts and circumstances, and that entities should consider providing disclosures describing where the IEEPA tariffs and related tariff recoveries are recorded in the financial statements.

The discussion all appears rational enough…which is more than one can say about the underlying fact pattern. I say this in the sense that Trump’s disregard for legality, convention, and the appropriate limits of his own authority (taking for example his overriding of various contracts and treaties with foreign governments) render America’s basic precepts and structures increasingly untrustworthy (most prominently, there’s good reason to think that upcoming US elections won’t meet basic standards of fairness and transparency, and even as I drafted this post, Trump announced yet another round of legally and economically dubious tariffs). For any entity to argue it met the case for asset recognition at March 31, 2026 in the scenario above would have seemed fanciful at best. The more troublesome question is to what degree the erosion of America, and the creeping corruption of much of its legal and regulatory processes, might call into question other accounting determinations which would once have seemed unassailable…

The opinions expressed are solely those of the author.