In a significant legal challenge, warehouse club leader Costco has filed a lawsuit against the Trump administration, arguing that its invocation of executive authority to impose sweeping tariffs exceeds constitutional limits. The company is seeking a refund for tariffs paid and asking the court to halt the collections.
Core Argument: Exceeding Statutory Authority
The legal filing, lodged with the U.S. trade court, centers on the White House's application of the IEEPA emergency law. Costco claims this legislation was wrongfully used to impose the duties. Quoting the law itself, the company pointed out that IEEPA grants powers only to deal with an "unusual and extraordinary threat" and crucially "omits the word ‘tariff’ or any term of equivalent meaning".
"The vehicle is the levying of duties on Americans, and that has always been a core power of Congress," remarked Chief Justice John Roberts during prior court proceedings.
The Urgency Factor
While the Supreme Court is set to decide on the constitutionality of the tariffs in the coming months, Costco's lawsuit argues swift judicial intervention is essential. The reason stems from government rules known as "liquidation," where the customs agency concludes duty calculations roughly ten months following goods are imported. Once liquidation occurs, courts have warned importers may lose the legal right to recover refunds, "even where the underlying legality of a tariff is subsequently ruled to be unlawful".
Consequently, even if the Supreme Court strikes down the tariffs, Costco is concerned it could be unable to recover money previously submitted if too much time has elapsed.
The Retailer's Demands
Through its petition, Costco is asking the trade court to:
- Rule the Trump-era tariffs unlawful.
- Stop the continued collection of these tariffs.
- Mandate reimbursement for all tariffs the retailer has already paid.
- Prevent liquidation of its tariff entries to preserve its right to a future repayment.
The Financial Stakes
The scale of tariff revenue has surged. Reports indicate total collections in the 2025 budget year soared to $195 billion, a significant rise from $118 billion the previous year. Monthly collections are said to have climbed from around $7 billion to $30 billion over those months.
While Costco has not revealed its exact duty payments, it has indicated that approximately a third of its U.S. sales are derived from overseas products, with nearly half originating from China, Mexico, and Canada.
This lawsuit highlights the ongoing tension between executive authority and legislative authority over trade policy, with billions of dollars possibly dangling in the balance.
