Costco's Tariff Refund Bid Hinges on Supreme Court's IEEPA Ruling

Costco Wholesale Corporation has joined a growing list of companies challenging the legality of President Donald Trump's sweeping tariff policies, seeking refunds for duties paid under a framework now under scrutiny by the U.S. Supreme Court. The warehouse giant filed a lawsuit in the U.S. Court of International Trade on Dec. 1, 2025, requesting a full refund of tariffs imposed this year and a temporary halt to their collection while the legal battle unfolds. The case hinges on a looming deadline-Dec. 15, after which tariffs paid by companies could become non-refundable even if the Supreme Court ultimately rules they were improperly enacted.

The Trump administration has relied on the International Emergency Economic Powers Act (IEEPA), a Cold War-era law, to justify tariffs on imports from over 100 countries, including China and European allies. These measures, which include a 125% tariff on Chinese goods and a global "Liberation Day" tariff of at least 10%, have been criticized for their broad scope and lack of clear national security justification. The Supreme Court heard arguments in November over whether IEEPA permits such sweeping unilateral action, with justices expressing skepticism about the administration's interpretation of the law.

Costco's lawsuit highlights the financial risk faced by import-dependent businesses. The company argued that U.S. Customs and Border Protection (CBP) denied its request to extend the deadline for liquidating tariffs, a process that finalizes the amount owed on imported goods. This decision, Costco claims, threatens to lock in costs that could be invalidated if the Supreme Court upholds lower court rulings declaring the tariffs illegal. The retailer is not alone; dozens of other firms have pursued similar legal action to preserve their right to refunds.

Trump's tariff strategy has been a cornerstone of his economic agenda, with the president asserting that the measures have made the U.S. "rich, strong, powerful, and safe." He has linked tariffs to record stock market gains, declining inflation, and a stronger military, while dismissing concerns about their regressive impact. However, analysts and economists warn that the tariffs could exacerbate inflation, disproportionately burden low-income households, and strain global trade relations. A Yale study found that the poorest 10% of earners face a tax rate three times higher than the wealthiest 10% due to tariffs, underscoring their uneven economic effects.

The legal uncertainty has not dampened investor confidence in Costco, which continues to outperform expectations. The company's Q4 2024 earnings showed net sales of $78.2 billion, a 1% increase year-over-year, with membership growth and e-commerce expansion driving profitability. Analysts at JP Morgan and other firms maintain an "overweight" rating for Costco, citing its strong market position and ability to navigate supply chain challenges. Despite the lawsuit, the retailer's financial health appears resilient, with a robust balance sheet and expanding international footprint.

The Supreme Court's decision could reshape U.S. trade policy for years to come. If the court invalidates Trump's IEEPA-based tariffs, the administration may turn to alternative statutes, such as the Trade Agreements Act of 1979, to justify new protections. However, these laws come with narrower scope and greater legislative oversight, complicating Trump's vision of unilateral trade control. For now, companies like Costco are hedging their bets, leveraging the courts to protect their financial interests in a high-stakes legal showdown.