Why is Costco Suing Trump?

It is not every day that a warehouse club chain becomes a courtroom gladiator. But that’s exactly what Costco has done by stepping out of the aisles filled with bulk cheese wheels and toilet paper and marching into federal court. The reason: a tangled web of emergency tariffs spun up by Donald J. Trump, and a looming threat that the hundreds of millions (if not billions) Costco poured into import duties could vanish like a clearance deal that never made it to checkout.

Let’s break down with this blog why Costco decided to sue, what’s at stake, and what this legal showdown could mean not just for one retailer but for global trade.

What Exactly Happened with Costco and Trump Tariffs?

At the heart of the matter lies the 1977 International Emergency Economic Powers Act (IEEPA). Earlier this year, the Trump administration used this law to impose sweeping “reciprocal” tariffs on a wide swathe of imports from countries such as China, Canada and Mexico.

Now the legal waters are choppy. Three lower US courts have already struck down the emergency tariffs, saying the act does not give the president authority to impose new or higher tariffs, only Congress does. The matter reached the Supreme Court of the United States (SCOTUS), which heard arguments on November 5 and flagged serious doubts about the legality of the tariffs.

But there’s a catch. Even if SCOTUS rules the tariffs illegal, that doesn’t automatically guarantee businesses will get their money back. Why? Because US customs procedure involves a step called “liquidation” which is a final review after which import duties become locked. Once that step is done, recovery becomes difficult, unless companies take their own legal action.

That’s why Costco filed a lawsuit on November 28 in the United States Court of International Trade (in Manhattan). Its complaint asked for a court order to prevent the liquidation of its import entries until SCOTUS has ruled on the tariffs’ legality thereby ensuring it does not lose the right to full refunds.

Why Now and Why Costco?

Timing is everything. Customs and Border Protection reportedly denied Costco’s request for extra time to complete final tariff calculations. With liquidation schedules beginning as early as December 15, waiting any longer could lock the duties for good, refund or no refund.

Costco is not just any company in this fight. With about $275.2 billion in revenue for the fiscal year ending August 31, 2025, it is one of the biggest retailers in the US markets and among the largest to throw its hat in the ring.

Also, while around a third of its US sales come from imported goods and less than half of those from China, Mexico, and Canada, the tariff bite has been serious enough for the company to change course. Costco has reportedly reduced the number of suppliers, leaned more on local sourcing, and even pushed its in-house brand (Kirkland Signature) harder, to offset tariff pressures.

In short, Costco has both the size and the incentive to act before the door to refunds slams shut.

What to Look Out for Next?

The first big milestone will be if SCOTUS rules on the legality of the tariffs. If the court says the emergency-powers route was unlawful, it could ripple across hundreds of companies and potentially trigger massive refund claims. Some estimates suggest the government might owe up to “trillions” in duty refunds, though exactly how much remains unclear.

But even if SCOTUS rules in favour of Costco and others, the fight may not end. Companies will likely need separate lawsuits or risk losing refunds if their entries are liquidated. That means more legal battles, more uncertainty, and possibly a flood of claims. That could keep customs offices busy for years.

From a broader economics perspective, this case could reshape how companies view supply chains and sourcing strategies. If tariffs get invalidated (or refunds happen), import-heavy retailers might breathe easier. But if it turns out the refunds are hard to secure or if courts rule the liquidation step final irrespective of SCOTUS decision then the risk of sudden import-cost hikes remains real.

How Could This Impact Costco Share Price?

• A favourable SCOTUS ruling could boost sentiment by opening the door to meaningful tariff refunds that support margins.
• If refunds are denied or delayed, the COST Stock may trade largely in line with broader retail and consumer-spending trends.
• The lawsuit itself is unlikely to cause major volatility since Costco’s core business remains stable and resilient.
• Investors may watch for updates closely, but long-term fundamentals are expected to drive the stock more than the legal outcome

Final Take

In many ways, Costco’s lawsuit is more than a corporate tug-of-war over tariffs. It is a test of how far emergency powers can stretch, how much predictability global businesses can expect, and how quickly rules can shift under political pressure. For a retailer that built its brand on predictability, value, and razor-thin margins, the tariff cloud isn’t just a financial nuisance, it’s a strategic threat. 

As the Supreme Court prepares to weigh in, companies around the world are watching closely, hoping this legal clash brings clarity instead of more uncertainty. For now, Costco has done what any savvy shopper would do at checkout: pause the transaction until the math adds up. Whether it gets its money back or ends up absorbing a costly bill, it will be a story worth following.

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