Launching a major courtroom battle, warehouse club leader Costco has initiated litigation against the Trump administration, arguing that its use of emergency powers to levy extensive duties oversteps legal boundaries. The retailer is seeking a refund for tariffs paid and asking the court to stop the duties.
Legal Grounds: Exceeding Statutory Authority
The legal filing, submitted to the Court of International Trade, focuses on the White House's application of the IEEPA emergency law. Costco claims this legislation was misapplied to justify the tariffs. Citing the statute's text, the retailer noted that IEEPA confers authority only to deal with an "unusual and extraordinary threat" and significantly "does not use the word ‘tariff’ or any term of equivalent meaning".
"The mechanism constitutes the levying of duties on Americans, and that has traditionally remained a fundamental authority of Congress," remarked the Supreme Court's Chief Justice during recent oral arguments.
The Urgency Factor
Although the nation's highest court is poised to rule on the constitutionality of the tariffs this spring, Costco's legal team contends swift judicial intervention is necessary. This is because federal procedures known as "liquidation," where the customs agency concludes duty calculations 314 days after goods enter the country. Once liquidation occurs, courts have warned importers could forfeit the legal right to recover refunds, "even where the underlying legality of a tariff is subsequently ruled to be unlawful".
Therefore, even if the Supreme Court strikes down the tariffs, Costco is concerned it might not recoup funds already paid if an excessive period has passed.
The Retailer's Demands
Through its petition, Costco is requesting the court to:
- Declare the contested duties unlawful.
- Stop the continued collection of these tariffs.
- Mandate reimbursement for all tariffs the company has previously remitted.
- Prevent liquidation of its tariff entries to safeguard its ability to a potential refund.
Broader Context
The scale of customs income has surged. Data shows overall duty revenue in fiscal year 2025 jumped to $195 billion, a significant rise from $118 billion the previous year. Monthly collections reportedly increased from around $7 billion to $30 billion during that period.
While Costco has not revealed its exact duty payments, it has indicated that roughly one-third of its American revenue are derived from imported goods, with nearly half originating from key trading partners.
This legal action highlights the ongoing tension between presidential power and congressional prerogatives over trade policy, with vast sums of money possibly dangling in the balance.
