Your Q2 2026 Form 10-Q is due August 11 if you are a large accelerated filer or accelerated filer, and August 14 if you are a non-accelerated filer. If you are drafting MD&A this week, tariff disclosure is not optional and it is not a risk factor checkbox. It is an operational disclosure that the SEC staff has been scrutinising in comment letters since early 2025 and that OCA chief accountant Heather Rosenberger addressed specifically at SEC Speaks in April 2026.
The message from regulators is consistent and specific: the specificity of tariff disclosures has increased meaningfully over the past year but must continue to improve. Generic risk language naming tariffs as a contributing factor to margin compression without quantification does not satisfy Item 303. Non-GAAP adjustments designed to strip out the impact of tariffs are likely not appropriate for most companies. And companies that have experienced material tariff exposure in Q2 2026, which for many importers covers the IEEPA tariff period, the post-SCOTUS cessation period, and the CAPE refund portal period all within a single quarter, need to describe all three phases of that experience to give investors a complete picture.
This post is a practical drafting guide for controllers and CFOs preparing Q2 2026 10-Q tariff disclosures. It covers what the SEC staff has flagged in prior comment letters, what quantification actually means in practice, where in the 10-Q each type of tariff disclosure belongs, and how to build a disclosure framework that will not generate a comment letter of its own.
Why Tariff Disclosure Is the SEC's #1 Comment Letter Topic for Q2 2026
The SEC staff does not broadcast a ranked list of Q2 2026 comment priorities. What it does is issue comment letters that accumulate into a public record, and the comment letter record on tariff disclosure since 2025 is extensive enough to constitute an informal priority signal.
Gibson Dunn's February 2026 analysis of fiscal 2025 Form 10-Ks confirms that companies have been quantifying the effects of certain tariffs and including more robust examples and discussions of mitigation strategies in response to comment letters received in 2025. The Mayer Brown analysis of SEC comment letter trends for the 12-month period ended March 31, 2026 confirms that MD&A remains the top comment category by volume, and that the staff's focus within MD&A continues to concentrate on the quantification of material factors contributing to period-over-period changes.
Tariffs are the primary new material factor for most import-dependent companies in 2025 and 2026. For calendar-year companies, Q2 2026 covers the period from April 1, 2026, through June 30, 2026. The IEEPA tariffs that were imposed beginning in February 2025 and that drove cost increases through early 2026 were invalidated by the Supreme Court on February 20, 2026. Q2 2026 is therefore not primarily a tariff imposition quarter for most companies: it is the quarter of cessation of the IEEPA tariff burden, the opening of the CBP CAPE portal for IEEPA tariff refunds, and the ongoing applicability of Section 301 (China), Section 232 (steel and aluminum), and other tariff regimes that were not affected by the SCOTUS ruling.
That complexity is precisely why the Q2 2026 10-Q tariff disclosure is both more nuanced and more important than prior quarters. The SEC staff expects a disclosure that reflects the specific experience of the company in Q2 2026, not a carryforward of the Q4 2025 or Q1 2026 boilerplate.
K&L Gates's 2026 reporting season guide is explicit: even where the impacts of tariffs are not currently material, companies should monitor and disclose the risk of future tariff-driven volatility and should assess whether existing disclosures appropriately capture exposure to evolving political, economic, or regulatory developments in key markets.
What the SEC Actually Expects: Company-Specific vs Generic Risk Language
The SEC staff's comment letter pattern on tariff disclosure has a single consistent thread: company-specific, quantified disclosures versus generic, industry-level risk language.
Here is the distinction in concrete terms. A disclosure that reads "Our business may be adversely affected by tariffs and trade restrictions, including those recently imposed on goods imported from China and other countries" does not satisfy Item 303 for a company where tariff costs were a material driver of gross margin compression in Q2 2026. That disclosure says nothing about this company's specific tariff exposure, says nothing about the magnitude of the impact, and says nothing about what the company is doing about it. It is the kind of disclosure a staff reviewer flags because it could have been written by any company in any industry.
A disclosure that satisfies Item 303 for the same company might read: "In the second quarter of 2026, we incurred approximately $14 million in incremental costs attributable to Section 301 tariffs on components sourced from China, representing approximately 180 basis points of gross margin compression in the quarter. We offset approximately $6 million of this cost through pricing adjustments and supplier renegotiations, resulting in a net tariff impact of approximately $8 million on gross profit compared to Q2 2025."
The differences are: a specific dollar figure, a specific tariff regime, a specific product or component category, a specific margin impact quantified in basis points, and a specific mitigation analysis with estimated offset amounts. Gibson Dunn confirms this is what companies that have handled tariff disclosure well have done.
White and Case's 2026 annual reporting guidance confirms the standard more broadly: MD&A comments focus on the description and quantification of each material factor that has caused changes in results of operations between periods. The staff does not distinguish between tariff factors and other cost factors in its comment approach: if it is material and it moved the numbers, it needs to be quantified.
Where in the 10-Q Tariff Disclosures Must Appear: Risk Factors, MD&A, and Footnotes
A complete Q2 2026 10-Q tariff disclosure package spans three locations in the filing. Each location serves a different disclosure purpose and is governed by a different standard.
Risk Factors (Part II, Item 1A). The risk factor section in the quarterly report covers material changes to the risk factors previously disclosed in the annual report or the most recent quarterly report. If the tariff environment has changed materially since the Q1 2026 10-Q was filed, including the SCOTUS ruling on IEEPA tariffs, the opening of the CAPE refund portal, or developments in Section 301 or Section 232 tariff levels, the risk factor section should be updated to reflect those changes.
The critical point here is one that K&L Gates flags specifically: a risk factor describing IEEPA tariff uncertainty as a future risk in the Q2 2026 10-Q is incorrect. The IEEPA tariffs were invalidated on February 20, 2026. The risk factor should accurately describe the current state: which tariff regimes remain in effect, what the company's current exposure under those regimes is, and what the uncertainty is going forward. A risk factor that still describes IEEPA tariff imposition risk as a forward-looking uncertainty when those tariffs have already been invalidated is a disclosure accuracy problem, not a conservative disclosure choice.
MD&A Results of Operations (Part I, Item 2). This is where the quantified tariff impact belongs. The results of operations discussion must describe and quantify each material factor that caused period-over-period changes in revenue, gross margin, operating income, and other material line items. If tariffs were a material factor in any of those lines in Q2 2026 versus Q2 2025, they must be described and quantified here.
For Q2 2026 specifically, the results of operations discussion should address:
The period during which IEEPA tariffs were no longer in effect (February 20 through end of quarter), and what the year-over-year cost comparison looks like for that sub-period.
The tariff regimes that remained in effect throughout Q2 2026 (Section 301, Section 232, any other applicable tariffs), and the cost impact of those regimes in the quarter.
Any IEEPA tariff refund amounts recognised or not recognised in Q2 2026, and the accounting policy applied.
MD&A Liquidity and Capital Resources. If IEEPA tariff refund receivables represent material expected cash inflows, the liquidity discussion should address the refund claim status, the accounting policy for recognising the receivable, and the expected timing of receipt.
Financial Statement Footnotes. For companies that have recognised or are evaluating recognition of IEEPA tariff refund receivables, the accounting policy footnote and any contingent gain footnote under ASC 450-30 belong in the financial statements. The Q2 2026 10-Q income tax footnote should also address any tariff-related impacts on the effective tax rate, particularly for companies where tariff costs affected the geographic mix of earnings or the CAMT calculation.
What "Quantification" Means: How to Disclose Dollar Impact on COGS, Margins, and Inventory
The SEC staff's quantification standard for material cost drivers in MD&A is not vague. The staff expects the dollar or basis point impact of the material factor to be disclosed, the specific line items affected to be identified, and the period covered to be clear.
For tariffs in Q2 2026, quantification means:
Dollar impact on cost of goods sold or cost of revenues. State the incremental tariff costs incurred in Q2 2026 that are embedded in cost of goods sold, either in absolute dollar terms or as a percentage of the line item. For companies that have IEEPA tariff refund receivables, state the amount recognised as a reduction of cost of goods sold in Q2 if applicable.
Basis point impact on gross margin. A basis point statement is often more useful than a dollar statement for communicating the margin effect to an investor. If Section 301 tariffs on imported components reduced gross margin by 220 basis points in Q2 2026 compared to Q2 2025, say that.
Inventory cost impact. If tariff costs have been capitalized into inventory and remain in inventory at quarter-end, the quantity and carrying value of that tariff-loaded inventory should be disclosed if material. Investors want to understand whether the tariff impact is already in the income statement or still sitting on the balance sheet awaiting recognition.
Segment-level specificity. For companies with multiple reportable segments, a company-level gross margin impact statement may obscure which segments are most affected. If tariff costs are concentrated in specific segments, the segment-level MD&A discussion should reflect that concentration.
The practical challenge for many controllers is that the ERP does not produce a line called "tariff costs." Tariff costs are embedded in purchase price variances, freight costs, or duty accounts that roll up into cost of goods sold without a clean separate line. Building the tariff cost bridge requires pulling customs duty records, supplier invoice variance data, and freight cost data and attributing them to the correct income statement periods and segments. That data assembly is the underlying work that must happen before the MD&A can be drafted with precision.
Mitigation Strategies: What the SEC Expects You to Disclose About What You're Doing
Gibson Dunn's February 2026 analysis is specific about this: companies should include more robust examples and discussions of mitigation strategies in their tariff disclosure. The staff is not satisfied with a disclosure that quantifies the tariff impact and stops there. The expectation is that the disclosure explains what the company is doing about it.
Mitigation strategies that belong in the Q2 2026 10-Q MD&A, when applicable:
Supplier diversification. If the company has reduced its dependence on tariff-affected sourcing geographies, quantify the shift if possible. What percentage of previously China-sourced components has been moved to other suppliers? At what cost premium or discount?
Pricing actions. If the company has passed some or all of the tariff cost to customers through price increases, disclose the approximate offset. "We implemented selective price increases beginning in Q4 2025 that offset approximately 40% of our Section 301 tariff exposure in Q2 2026" is a meaningful disclosure. "We are evaluating pricing actions" is not.
Inventory pre-buy and supply chain restructuring. If the company built inventory ahead of anticipated tariff changes, disclose the cost of carrying that inventory and how it affected Q2 results.
Tariff engineering and classification review. If the company has undertaken tariff classification reviews, first sale valuation elections, or other customs compliance strategies that reduced effective duty rates, those actions should be mentioned if they had a material impact on Q2 costs.
IEEPA refund status. For companies that are importers of record for IEEPA-tariffed goods, the Q2 10-Q should disclose whether the company has filed protests with CBP, submitted a CAPE Declaration, and recognised or evaluated recognition of a refund receivable. The accounting policy election (ASC 410-30 loss recovery model or ASC 450-30 gain contingency model) should be identified if material.
Forward-Looking Tariff Uncertainty: How to Handle "Known Trends or Uncertainties" Under Item 303
Item 303(b)(2)(ii) of Regulation S-K requires MD&A to describe any known trends or uncertainties that have had or that the company reasonably expects will have a material favourable or unfavourable impact on net sales or revenues or income from continuing operations.
For Q2 2026, the forward-looking tariff disclosure needs to address two distinct categories of uncertainty that most companies are navigating simultaneously.
Section 301 and Section 232 ongoing exposure. These tariff regimes remain in effect and their future levels are subject to executive and trade policy actions. If the company's business is materially affected by existing tariff levels under these regimes, the forward-looking discussion should identify the specific exposure, the rate of tariff applicable, the volume of goods subject to that tariff, and the company's current and planned mitigation.
IEEPA refund uncertainty. Even though the IEEPA tariffs have been invalidated, the refund process is uncertain in timing and amount. Companies that have material IEEPA tariff refund claims should disclose the nature of the claim, the estimated amount, the current status of CBP processing through the CAPE portal, and the timeline uncertainty. This is a known uncertainty with material potential impact on future cash flows and income, and it belongs in the forward-looking Item 303 discussion.
The standard for triggering the known trends or uncertainties disclosure is that management is aware of the trend or uncertainty and reasonably expects it will have a material impact. The threshold is awareness and reasonable expectation, not certainty. If your company expects IEEPA tariff refunds to be material when received but cannot predict the timing, that is precisely the kind of known uncertainty that Item 303 is designed to surface.
How to Handle Tariff Disclosure When the Impact Is Indirect (Customer Demand, Not Just Input Costs)
Not every company's tariff exposure runs through its own cost of goods sold. For some companies, tariffs affect them through their customers' purchasing behaviour rather than through their own import costs.
A software company selling to manufacturers whose capital spending has been constrained by tariff-related margin pressure does not have direct tariff costs in its income statement. But it may have experienced reduced enterprise software demand or delayed purchasing decisions that are attributable to tariff-driven customer uncertainty. If material, this indirect channel of tariff impact belongs in the MD&A.
A logistics company that has seen volume declines because importers are shipping fewer goods does not pay tariffs directly. But if shipping volume fell materially in Q2 2026 because tariff costs were reducing the volume of goods crossing borders, the MD&A should connect the revenue decline to the tariff environment.
The obligation under Item 303 is to discuss material factors that caused changes in results. It does not limit those factors to ones that run through your own supply chain. If tariffs caused changes in your customers' purchasing behaviour and that change materially affected your revenue, the causal chain should be disclosed even though you are not the importer of record.
The SEC staff has specifically flagged disclosures that describe indirect tariff impacts without tracing them to the specific customer or market mechanism. A disclosure that says "revenue declined due to uncertainty in the macroeconomic environment including trade policy" attributes a specific revenue decline to a general macroeconomic category without identifying whether the specific driver was tariff costs, tariff uncertainty affecting customer investment decisions, or some other macroeconomic factor. That level of vagueness in attributing a material revenue change does not satisfy Item 303.
What SEC Comment Letters Have Actually Said About Insufficient Tariff Disclosure
The SEC staff does not summarize its comment letter themes in a tariff-specific annual report. What exists is a body of individually posted comment letters on EDGAR (filing type UPLOAD) and company responses (filing type CORRESP) that accumulate into a pattern.
The pattern that emerges from the post-2025 comment letters on tariff disclosure, as synthesized by Gibson Dunn, White and Case, and Mayer Brown:
Comment type 1: Attribution without quantification. The most common pattern. Staff comments noting that the company identified tariffs as a contributing factor to cost of goods sold increases or gross margin compression but did not quantify the tariff contribution separately from other cost drivers. The standard response request: revise to quantify the tariff contribution to the period-over-period change.
Comment type 2: Generic risk factor language that does not reflect current facts. Comments noting that the risk factor language describes tariff risk as a future uncertainty when the company has already experienced material tariff costs in prior periods covered by the filing. The response request: revise the risk factor to distinguish between tariff impacts already experienced and prospective uncertainty.
Comment type 3: Mitigation claimed without specificity. Comments noting that the company referenced mitigation strategies without disclosing whether those strategies fully offset the tariff impact, partially offset it, or were only expected to offset it in future periods. The response request: revise to quantify the estimated offset from mitigation actions, or explain why quantification is not possible.
Comment type 4: Inconsistency between risk factor and MD&A. Comments noting that the risk factor described tariffs as a potential future risk while the MD&A simultaneously described material tariff costs already incurred. The response request: align the risk factor characterisation with the factual disclosure in MD&A.
Perkins Coie's summary of SEC Speaks 2026 confirms that OCA's Heather Rosenberger noted the specificity of tariff disclosures has increased meaningfully but flagged non-GAAP adjustments designed to strip out the impact of tariffs as likely not appropriate for most companies. The OCA's view: tariff costs are a recurring operating cost for companies that import goods, not a one-time unusual item that belongs in a non-GAAP exclusion.
A Sample MD&A Tariff Disclosure Framework for Q2 2026
This is a structural framework, not a template to be copied verbatim. Every company's disclosure must reflect its own specific facts, tariff regimes, and quantified impacts.
Results of Operations, Cost of Goods Sold (or Cost of Revenues) section:
Begin with the total dollar change in cost of goods sold or cost of revenues for Q2 2026 versus Q2 2025 and as a percentage of revenue. Then break down the material drivers of that change. If tariff costs are a material driver, introduce the tariff discussion at this point:
"Cost of goods sold increased $[X] million, or [Y]%, in the second quarter of 2026 compared to the second quarter of 2025. The increase was driven primarily by [primary driver], partially offset by [offset]. Tariff costs under Section 301 on goods imported from China contributed approximately $[Z] million to the increase, representing approximately [basis points] of gross margin compression in the quarter. We implemented [specific actions] beginning in [date] that offset approximately $[amount] of this cost. The net impact of tariff costs on gross profit in Q2 2026 compared to Q2 2025 was approximately $[net amount]."
For IEEPA refund accounting (if applicable):
"The Supreme Court's February 20, 2026 ruling invalidating IEEPA-based tariffs created a potential refund claim for tariffs paid by us as the importer of record from [date] through [date]. We have recognised / not recognised a tariff refund receivable of $[amount] as of June 30, 2026 under [accounting policy: ASC 410-30 loss recovery model / ASC 450-30 gain contingency model]. [If recognised: This receivable represents previously paid IEEPA tariff costs that we have assessed as probable of recovery and for which the amount can be reasonably estimated. We submitted our CAPE Declaration with CBP on [date] and are monitoring the status of refund processing.] [If not recognised: We are monitoring developments in the CBP CAPE refund process and will recognise a receivable when the criteria for recognition are met.]"
Liquidity and Capital Resources:
"We had approximately $[amount] in IEEPA tariff refund claims pending with CBP as of June 30, 2026. The timing and amount of refund receipts remain uncertain. We have / have not recognised a receivable for these claims as described in Note [X]."
Risk Factors:
"We are subject to tariffs on goods we import, including Section 301 tariffs on goods imported from China at rates of [X]% on [product categories] and Section 232 tariffs on [steel / aluminum] at [Y]%. In Q2 2026, these tariffs resulted in incremental costs of approximately $[Z] million. Tariff levels and the scope of goods subject to tariffs are subject to change based on executive action and trade negotiations, and changes to current tariff levels could materially affect our cost structure and operating results. The IEEPA-based tariffs imposed beginning in February 2025 were invalidated by the Supreme Court on February 20, 2026. We are evaluating our potential refund claims under the CBP CAPE process but cannot predict the timing or amount of any refunds we may receive."
Frequently Asked Questions
Does the SEC require tariff disclosure in the Q2 2026 10-Q?
The SEC does not have a tariff-specific disclosure rule. The obligation comes from Item 303 of Regulation S-K, which requires MD&A to discuss and quantify material factors that contributed to changes in results of operations, and to identify known trends or uncertainties reasonably expected to have a material impact on future results. For companies where tariff costs were a material factor in Q2 2026 results or where tariff uncertainty creates material future risk, disclosure is required under these existing standards. The SEC staff has issued comment letters making this application explicit in prior quarterly filings.
What level of quantification does the SEC expect for tariff impacts?
The SEC expects the dollar or basis point contribution of tariffs to material period-over-period changes in cost of goods sold, gross margin, or operating income to be disclosed separately from other cost drivers. Naming tariffs as a contributing factor without quantification is the pattern most commonly flagged in comment letters. The quantification should identify the specific tariff regime (Section 301, Section 232, former IEEPA), the affected product or component category, and the estimated mitigation offset.
Where in the 10-Q does tariff disclosure belong?
In three places: the risk factor section (updated to reflect the current tariff environment after the SCOTUS IEEPA ruling), the results of operations discussion in MD&A (quantified discussion of Q2 tariff cost impacts on specific line items), and the liquidity and capital resources section (for IEEPA tariff refund receivables or claims that are material to expected cash flows). The financial statement footnotes should address the accounting policy for any recognised refund receivable.
What happens if tariff impacts are not yet material but may become material?
Item 303 requires disclosure of known trends or uncertainties that the company reasonably expects will have a material impact, even if they have not yet been material. K&L Gates specifically recommends that companies monitor and disclose the risk of future tariff-driven volatility even where current impacts are not material, and assess whether existing disclosures appropriately capture exposure to evolving trade policy developments.
What did SEC comment letters say about tariff disclosure in 2025?
The most common comment patterns were: attribution of cost increases to tariffs without quantification of the tariff-specific contribution; risk factor language describing tariffs as a future uncertainty when material tariff costs had already been incurred; mitigation strategy references without disclosure of whether those strategies fully or partially offset the tariff impact; and inconsistency between the risk factor characterisation (future risk) and the MD&A characterisation (current material cost driver) of the same tariff exposure.
Key Takeaways
- Q2 2026 Form 10-Qs are due August 11 for large accelerated and accelerated filers, and August 14 for non-accelerated filers. The MD&A tariff disclosure for Q2 2026 must address the full complexity of the quarter: IEEPA tariff cessation after February 20, the CAPE refund portal, and ongoing Section 301 and Section 232 tariff exposure.
- The SEC staff expects company-specific, quantified tariff disclosures. Naming tariffs as a contributing factor to cost increases without a dollar or basis point figure does not satisfy Item 303 where the impact was material. This is the single most common tariff comment letter pattern.
- Tariff disclosure belongs in three places: the risk factor section (updated to reflect post-SCOTUS reality), the results of operations MD&A (quantified period-over-period impact), and the liquidity section (IEEPA refund claims or recognised receivables).
- Mitigation strategy disclosure is expected alongside the cost impact disclosure. Quantify the estimated offset from pricing actions, supplier diversification, and other mitigation, or explain why quantification is not possible.
- For IEEPA tariff refunds, the Q2 10-Q must disclose the accounting policy election (ASC 410-30 loss recovery model or ASC 450-30 gain contingency model), whether a receivable has been recognised, and the CAPE portal status. OCA confirmed at SEC Speaks 2026 that few companies are currently recognising refunds due to uncertainty about how refund mechanisms will operate.
- Non-GAAP adjustments excluding tariff costs as non-recurring items are likely not appropriate for most companies, per OCA's Heather Rosenberger at SEC Speaks 2026. Tariff costs are a recurring operating expense for importers, not a one-time unusual item.
- Risk factors must accurately describe the current post-SCOTUS tariff environment. A risk factor describing IEEPA tariff imposition as a future uncertainty is factually incorrect and will generate a comment.
