Tariffs in 2025: Accounting and Tax Considerations for Importers

With a wave of new tariffs reshaping import costs, accountants are fielding questions that go well beyond “how much.” Tariffs touch inventory costing, margins, cash flow, and even transfer pricing — here’s a practitioner’s view of the accounting and tax angles.

Tariffs are a cost of inventory

Import duties are generally treated as part of the cost of the goods — capitalized into inventory and flowing through cost of goods sold as the items are sold, rather than expensed immediately. That means higher tariffs can quietly inflate inventory balances and compress gross margin.

Cash flow and timing

• Duties are typically paid at import, creating a cash-flow hit before the related revenue is earned.
• Businesses should revisit pricing, purchasing cadence, and working-capital needs.

Opportunities and complexities to know

• Duty drawback may allow recovery of duties on goods that are later exported.
• Customs valuation methods (including first-sale rules) can affect the dutiable amount.
• Transfer pricing and customs value need to be reconciled for related-party imports.
• Supply-chain shifts can create new nexus and state-tax questions.

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This article is general information for tax and accounting professionals and is not tax, legal, or accounting advice. Rules, rates, and thresholds change and have specific effective dates — confirm current requirements with the IRS, U.S. Customs and Border Protection, or qualified counsel before acting or advising clients.