Costco's Attempt to Recover Tariffs Depends on Supreme Court Decision Regarding IEEPA

Costco Challenges Trump-Era Tariffs in Court

Costco Wholesale Corporation has joined a wave of businesses contesting the legality of former President Donald Trump’s expansive tariff measures. The retail giant filed a lawsuit in the U.S. Court of International Trade on December 1, 2025, aiming to recover tariffs paid earlier this year and to temporarily halt further collections while the case is under judicial review.

The urgency of Costco’s legal action is heightened by a December 15 deadline, after which companies may lose the ability to reclaim tariffs—even if the Supreme Court later finds the duties unlawful.

Legal Basis and Supreme Court Scrutiny

The Trump administration invoked the International Emergency Economic Powers Act (IEEPA), a statute dating back to the Cold War, to justify imposing tariffs on imports from more than 100 countries, including China and key European partners. These tariffs include a 125% duty on Chinese products and a global “Liberation Day” tariff of at least 10%. Critics have argued that these sweeping measures lack a clear national security rationale.

In November, the Supreme Court heard arguments questioning whether IEEPA grants the executive branch such broad authority. Several justices expressed doubts about the administration’s interpretation of the law.

Financial Risks for Importers

Costco’s lawsuit underscores the financial uncertainty facing companies that rely heavily on imports. The retailer contends that U.S. Customs and Border Protection (CBP) refused to extend the deadline for finalizing tariff payments, a move that could lock in costs that might later be deemed invalid if the Supreme Court sides with lower courts against the tariffs. Costco is among dozens of companies taking legal steps to preserve their right to potential refunds.

Economic Impact and Criticism

Tariffs have been a central component of Trump’s economic policy, with the former president claiming they have strengthened the U.S. economy, boosted the stock market, reduced inflation, and enhanced national security. However, many economists and analysts caution that these duties could drive up inflation, disproportionately affect lower-income families, and strain international trade relationships.

Research from Yale University highlights the regressive nature of the tariffs, revealing that the lowest-earning 10% of Americans face a tariff-related tax rate three times higher than that of the top 10%.

Costco’s Performance Amid Legal Uncertainty

Despite the ongoing legal dispute, Costco’s financial performance remains robust. In the fourth quarter of 2024, the company reported net sales of $78.2 billion, marking a 1% increase from the previous year. Growth in membership and e-commerce has contributed to this success.

Analysts at JP Morgan and other financial institutions continue to rate Costco favorably, citing its strong market position and resilience in managing supply chain disruptions. The company’s solid balance sheet and expanding global presence further reinforce its stability, even as it navigates legal challenges.

Potential Shifts in U.S. Trade Policy

The Supreme Court’s forthcoming decision could have far-reaching implications for American trade policy. Should the court overturn the IEEPA-based tariffs, the administration may seek alternative legal avenues, such as the Trade Agreements Act of 1979, to implement new trade protections. However, these alternatives offer less executive flexibility and require more congressional oversight, potentially complicating efforts to enact unilateral trade measures.

For now, companies like Costco are turning to the courts to safeguard their financial interests as the outcome of this high-profile legal battle remains uncertain.