Costco diverged from the stance of most major corporations on Friday, initiating legal action against the Trump administration, asserting that the administration unlawfully overstepped its bounds by implementing wide-ranging tariffs this year — and seeking reimbursement should the Supreme Court eventually invalidate those duties.
The ongoing legal challenge, which saw oral arguments before the Supreme Court last month, centers on the validity of President Donald Trump’s power to levy tariffs by invoking legislation known as the International Emergency Economic Powers Act. Trump utilized these authorities to enforce import taxes reaching up to 50% against significant trading partners such as India and Brazil, and as high as 145% against China earlier in the year. Data from US Customs and Border Protection indicates that these tariffs have collectively cost US importers as much as $90 billion as of late September.
Costco sues US government regarding tariff reimbursements pending high court decision
Should the justices rule that Trump exceeded his authority in imposing the tariffs, the ensuing question will be who, apart from the five small enterprises currently challenging the Trump administration before the Supreme Court, qualifies for a rebate and through what mechanism such a process would occur. As Justice Amy Coney Barrett noted during the hearing last month, the potential path to refunds could prove to be a “disaster.”
In anticipation of potential repayments, numerous firms have been privately arranging extensions with CBP regarding the finalization date of their tariff payments—a procedure that could stretch over several months due to the inherent complexity of tariff regulations. Postponing the definitive settlement of these payments effectively facilitates a simpler route to obtaining a refund later on.
So, why is Costco adopting a distinct, more assertive strategy that openly contrasts with the administration’s objectives?
Financial incentives drive action
In the complaint lodged with the Court of International Trade, Costco’s legal team asserted that the massive wholesale operation, like numerous other importers, lacks an automatic guarantee of receiving a refund if the Supreme Court rules against the Trump administration.
Moreover, the filing alleged that CBP had rejected several attempts by Costco to secure the finalization of its tariff payments.
Trump, who recently characterized the lawsuit on Truth Social as being of “LIFE OR DEATH for our Country,” might also implement measures to further complicate the refund process, should the situation escalate.
“The sheer economic impact if President Trump’s lawful tariffs are not upheld is immense, a fact this lawsuit brings into sharp relief,” stated White House representative Kush Desai in a communication to CNN.
According to Marc Busch, a Georgetown School of Foreign Service professor specializing in trade law and policy, all these factors are propelling Costco to take extraordinary measures, even if it means becoming a target of the administration.
“They are clearly unconvinced that the Supreme Court will even address the headache companies face in getting refunds or the government’s ability to organize a structured system for that to happen,” Busch remarked, adding that he anticipates more companies will follow Costco’s lead.
Costco did not disclose the specific financial impact of the disputed tariffs on its operations within the filing. The retailer provided no comment to CNN.
Significant risk for potential gains?
Costco’s emphatically worded lawsuit and implicit criticism of Trump’s tariffs—alleging they were introduced in a “haphazard fashion … leading to market volatility”—might place the firm in an awkward position with the White House.
Amazon experienced the consequences of this firsthand after it reportedly considered showing customers the extent to which tariffs were inflating certain product costs. White House press secretary Karoline Leavitt labeled this as a “hostile and political move,” which resulted in a dip in the company’s stock value. Following a reported irate conversation between Trump and Amazon founder Jeff Bezos, the e-commerce giant decided against publicizing any resulting price increases tied to tariffs.
Since then, Amazon and other major retailers have largely refrained from actions that could provoke a similar conflict. They have also remained quietly on the sidelines while the tariff litigation progresses, despite having substantial—in the tens of millions of dollars, at minimum—financial stakes dependent on the outcome.
However, inaction on the sidelines carries its own price.
Emil Stefanutti, CEO of Gaia Dynamics, an AI-driven trade compliance firm, suggests that if Costco had not sued the Trump administration, the company could “find itself in a situation where the tariffs are declared illegal, yet they are still unable to recover their capital.”
“For a firm of their magnitude, this could translate into bearing substantial, potentially unrecoverable losses.”
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