The Trump administration teased what it called “reciprocal tariffs” for months. But when the president unveiled his new tariff program last week, it became clear he was actually targeting US trade deficits with other nations.

To help walk us through this new tariff structure, and understand the potential long-term business consequences, CFO Brew recently spoke with Thomas Kemp, a professor and economics department chair at the University of Wisconsin-Eau Claire.

This interview was edited for length and clarity.

What do you think the results will be of these tariffs?

[It’s] extremely likely…we will see higher prices…The second thing that’s almost certain is that there is some contractionary impact of this. In other words, the economy will shrink to some degree.

The third thing that we can say with a high degree of certainty is that damage to American credibility globally has happened. How much damage? [It’s] hard to say, but some damage. Why? Because when you don’t do things that you say you’re going to do, or you don’t follow through on commitments that you made in the past, that makes you less credible in the eyes of others, and that’s what we’ve done.

For more thoughts on the impacts of tariffs, click here.—AZ

Oh, what a tangled web we weave.

Remember last December when news broke that a Macy’s employee hid $151 million in delivery expenses over the span of three years? The employee, who (duh) is no longer with the company, wasn’t pursuing personal gain, though. It actually started as a mistake, and then became a maaaaaassive cover-up in which an accounting error for small parcel delivery fees turned into a $151 million problem after the employee continued making (intentional) errors to hide the issue.

Like we said: Oh, what a tangled web…

Now, that web is getting even knottier. The company is recouping over $600,000 in executive bonuses because that $151 million mistake also led to $609,613 of “erroneously awarded compensation,” according to a company SEC filing. Whoops!

Basically: Macy’s cash bonuses for executives were tied to adjusted 2023 EBITDA, but because of the whole massive accounting scandal scenario, EBITDA was exaggerated by just above $81 million, thus “changing the overall payout” under Macy’s annual incentive plan “from 60.47% to 51.59% of target.”

For more on Macy’s comp clawback, click here.—NP

Would you be surprised to learn that a group of accountants are overachievers?

Well, that’s certainly true of the PCAOB. The board published its 2024 annual report, which showed that it inspected more than 230 audit firms in the US and globally in FY 2024, and reviewed more than 900 audit engagements. Audit deficiencies, it found through those inspections, fell significantly. Two in five audits showed Part 1.A deficiencies last year, compared with 46% in 2023.

The decline “follows concentrated efforts by the PCAOB to reverse the trend of rising deficiency rates coming out of the pandemic,” Chair Erica Y. Williams wrote in the report, remarks that are probably the closest the board will come to taking a victory lap.

2024’s big new auditing regs: The PCAOB also adopted two important auditing standards last year: QC 1000, which requires public firms to identify risks to their quality control systems and take steps to address them, and AS 1000, which consolidates and clarifies a group of standards about auditors’ general responsibilities that dated back to 2003.

The board also amended several existing standards: AS 1105 and AS 2301, which deal with technology-assisted audit analysis; and Rule 3502, which stipulates that auditors can be held liable for their role in their firms’ noncompliance with regulations if they act “negligently,” not just “recklessly.” And it filed a new amendment allowing it to take action when firms fail to file reports or pay dues in two years.

Keep reading here.—CV