Tariffs, Trade Wars, and the Hidden Risk to Your Balance Sheet: Why Q2 Is the Time to Reassess Goodwill

In today’s volatile trade environment, policies are changing faster than companies can adapt. Under the Trump administration, tariff policies are shifting roughly every 90 days. These changes are affecting cost structures and forecasts across industries, especially for companies with cross-border operations. If your company has goodwill recorded from a past acquisition, it may be time to assess whether those changes are creating a need to test for impairment. What once looked like a strategic acquisition can quickly turn into financial liability. 

Q2 is a very good time to do that. As we settle into the second quarter of the year, many businesses are catching their breath after tax season and looking ahead to mid-year planning. This is an ideal moment to pause and evaluate whether a shifting trade environment might have implications for your financial reporting.  

The Hidden Threat: How Tariffs Can Undermine Goodwill 

Goodwill often represents strategic growth potential: brand strength, customer loyalty, and operational synergies that justify a premium during an acquisition. But that potential can shift quickly when macroeconomic conditions change, those expectations can collapse quickly. Goodwill isn’t amortized like other assets; it stays on the balance sheet until its value is questioned. That questioning begins when external events signal risk, and tariff volatility is one of the clearest signals we’re seeing today.  

When a change in trade policy meaningfully impacts your future cash flow projections, it can be considered a “triggering event” under U.S. accounting standards. But identifying this early is not just checking a compliance box; it’s about knowing where the business stands and uncovering where it still has strength.  

What Trade Policy Shifts Mean for Acquisition Assumptions and Business Value  

Frequent tariff changes can quietly erode the assumptions underpinning a prior acquisition. If the deal was predicated on global growth or cost efficiencies that no longer exist, it may be time to reassess. Increased duties can raise material costs, reduce price competitiveness, or squeeze margins, all of which can affect fair value.  

By reassessing goodwill early, financial executives gain insight into how much value the business has retained and where exposure may be building. This insight isn’t just defensive. It opens the door to scenario modeling, realignment of business units, and optimization of capital allocation. You may identify underperforming segments, revise integration plans, or even position the company for a more strategic divestiture or recapitalization.  

Avoiding impairment is one goal. Unlocking clarity and optionality is the greater one. 

Why Q2 is the Best Window for a Strategic Goodwill Risk Review  

Mid-year is often a more stable time for operational bandwidth. Tax filings are behind you. Strategic planning for the second half is underway. This makes Q2 an ideal time to review impairment risk and avoid scrambling under audit deadlines.  

Many companies defer this analysis until Q4, but by then, options are limited, and pressure is high. Acting now allows for recalibrated forecasts, internal alignment, and more confident communication with your shareholders, board of directors, auditors, and lenders. You can control the narrative, rather than explain why you didn’t see the warning signs earlier.  

An Illustrative Case Study: Avoiding Impairment Through Early Goodwill Review  

Our client, a U.S.-based smart device company, acquired a Korean semiconductor manufacturer in 2021. The transaction added over $10 million in goodwill, reflecting anticipated cost savings and international growth. But when U.S. tariffs on imported chips increased in March 2025, their input costs jumped by 9 percent. Foreign demand also softened as pricing climbed.  

Leadership engaged us for an early goodwill review. We determined a triggering event had occurred. While the revised valuation supported the existing goodwill, the client used this opportunity to fine-tune their forecasts, flag risk areas, and update investor guidance before their next quarterly report.  

They didn’t just avoid impairment; they gained visibility into where the business could adapt and protect value moving forward.

What Financial Leaders Should Do Now to Protect and Unlock Value  

If your business holds goodwill and operates internationally, now is the time to:  

• Revisit and stress-test financial projections  

• Evaluate whether tariff changes qualify as a triggering event  

• Review the assumptions used in your last valuation  

• Document your findings and rationale, whether an impairment test is needed  

• Consult a valuation advisor who can help you extract insight, not just meet compliance  

Being proactive reduces the risk of an impairment charge and strengthens your position with auditors, investors, and lenders.  

Goodwill Holds Opportunity, Even in Uncertain Policy Environments  

Trade policy is shifting fast. With new tariffs and proposals emerging, or being paused within 90-day cycles, companies face growing uncertainty about cost structures, international operations, and long-term growth assumptions. While we may not yet know the final outcomes, waiting for certainty can leave you unprepared.  

That’s why forward-thinking companies are stress-testing their forecasts now. An early goodwill review isn’t about predicting policy, it’s about understanding how current volatility could affect value, identifying trigger points for impairment, and creating the flexibility to respond if the business environment continues to change.  

If you’d like to explore whether a goodwill review makes sense this quarter, our team is here to help you assess the risk and the opportunity with confidence and clarity.  

Get in touch today.