Costco Sues U.S. Government for Tariff Refunds After Supreme Court Declares Them Unconstitutional
Costco has initiated a lawsuit against the United States government seeking a full refund of import duties. This legal action follows the U.S. Supreme Court's recent declaration that the tariffs, implemented under the International Emergency Economic Powers Act (IEEPA), were unconstitutional. While the ruling validates Costco's core challenge, the specific process for securing refunds remains to be determined.
Background on Tariffs and Legal Challenges
The dispute revolves around tariffs imposed by the Trump administration, often termed "Liberation Day" tariffs. These were implemented using authority purportedly granted by the International Emergency Economic Powers Act (IEEPA).
Previously, lower courts, including the U.S. Court of International Trade and the U.S. Court of Appeals, had found that the administration exceeded its authority. They ruled that emergency powers were improperly utilized for these tariff impositions.
The Trump administration's legal team had contended that IEEPA provided the president with the power to impose global tariffs. They also cautioned that an unfavorable ruling could hinder future negotiation capabilities and lead to the loss of billions of dollars already collected by the Treasury. White House spokesperson Kush Desai had highlighted the significant economic consequences if the tariffs were not upheld. Former President Trump had also claimed the U.S. was collecting "Trillions of Dollars" in tariffs, suggesting a potential dividend payment to citizens.
Costco's Lawsuit and the Supreme Court Ruling
Costco filed its lawsuit with the U.S. Court of International Trade, seeking a declaration that the tariffs were illegal and aiming to secure a refund. The company pointed to negative business impacts from the tariffs and voiced concerns about securing refunds even with a favorable Supreme Court ruling. Costco indicated that a "separate action is necessary" to guarantee a refund.
The lawsuit was initiated ahead of a December 15, 2025, deadline, beyond which recouping funds would become significantly more challenging. While Costco has not revealed the specific amount it seeks, U.S. customs data indicates that importers have collectively paid approximately $90 billion in IEEPA-related tariffs as of late September.
The Supreme Court, after hearing oral arguments where justices reportedly expressed skepticism about the president's authority without congressional consent, has now declared these tariffs unconstitutional. Critically, the ruling did not address the refund process, leaving it as an unresolved issue.
Justice Brett Kavanaugh, in a dissent, commented that the refund process "is likely to be a mess."
Industry Context and Company Response
Costco is not alone in its legal challenge; numerous other companies, including Revlon, Bumble Bee, and Kawasaki, have also filed lawsuits seeking refunds. Trade law experts observe a shift, with larger corporations now actively participating in challenges that were initially led by smaller firms.
With a recorded revenue of $275 billion in its most recent fiscal year, Costco sources roughly one-third of its U.S. products internationally, primarily non-food items. The company stated it managed the tariff impacts by adjusting its product assortment.
Costco CFO Gary Millership noted that the company's buyers continuously sought new items and modified assortments to minimize the effects of the tariffs. Costco's core philosophy is to maintain low costs to provide competitive prices to its members. This legal challenge aligns with this strategy, aiming to preserve merchandising options and pricing flexibility.
Following the Supreme Court's decision on the IEEPA tariffs, former President Trump subsequently announced new 10% global tariffs, implemented under different statutory authority.