ISRG · 10-Q · 2026Q2 · Full report

Trade Policy and Tariffs

INTUITIVE SURGICAL INC · 2026-07-21 · Importance 72 · Surprise 100 · In source text

Beginning in 2025, the U.S. implemented baseline tariffs and higher country- and product-specific rates affecting trading partners including Mexico, Germany, and China. After the U.S. Supreme Court invalidated IEEPA-based tariffs in February 2026, a 10% Section 122 tariff took effect on February 24, 2026, for up to 150 days; the Federal Circuit kept the tariffs in place on June 11, 2026, and USMCA-originating goods remain excluded. Intuitive recognized $20.8 million of tariffs and other trade measures in total cost of revenue for the second quarter and $48.8 million for the six months ended June 30, 2026, while recording $35.9 million of prior-period IEEPA tariff refunds in the quarter. Most instruments and accessories manufactured in Mexicali, Mexico qualify for USMCA treatment, but tariffs affect German-made endoscopes and imports between the U.S. and China, increasing the product cost of da Vinci Xi systems sold in China; potential Chinese export restrictions on rare earth elements and critical minerals could materially restrict component access.

Key facts

• Revenue denominated in foreign currencies was approximately 27% and 28% of total revenue for the three and six months ended June 30, 2026, respectively. source
• In February 2026, the U.S. Supreme Court ruled that IEEPA-based tariffs were unlawful and a new 10% tariff for all imports under Section 122 of the Trade Act of 1974 was imposed effective February 24, 2026 for 150 days. source
• The Section 122 tariffs have been challenged in the U.S. Court of International Trade; on June 11, 2026, the U.S. Court of Appeals for the Federal Circuit extended its stay of the lower court’s ruling, keeping the 10% tariffs in place pending further proceedings. source
• During Q2 2026, we recognized $27.5 million of refunds related to IEEPA tariffs paid in prior periods, which reduced cost of product revenues. source
• During Q2 2026, we recognized $8.4 million of refunds related to IEEPA tariffs paid in prior periods, which reduced cost of service revenue. source
• Beginning in 2025, the U.S. implemented a baseline tariff framework on most imports with higher country- and product-specific rates for certain trading partners, including Mexico, Germany, and China. source
• IEEPA tariff refunds are accounted for as gain contingencies and recognized when fully realized or realizable; refunds attributable to inventory previously sold are recorded as a reduction of cost of revenue. source
• During the three months ended June 30, 2026, the Company recognized $35.9 million of refunds related to IEEPA tariffs paid in prior periods, which reduced total cost of revenue. source

Impact estimates