Costco Challenges Trump-Era Tariffs in Court
Costco has filed a lawsuit with the United States Court of International Trade challenging the legality of tariffs imposed by the Trump governance. The suit,filed Friday,argues that the president lacks the authority under the International Emergency Economic Powers Act (I-EEPA) to unilaterally set tariffs and seeks a declaration that the tariff orders are unlawful.
Traditionally,tariffs – taxes on imported goods – require congressional approval. However, in February, former President Trump invoked a 1977 national emergency law, typically used for sanctions, to implement global tariff orders, circumventing the standard legislative process. The Supreme Court is currently reviewing the legality of these tariff orders.
The outcome of Costco’s lawsuit, and potential compensation for tariffs already paid, hinges on the Supreme Court’s decision regarding the president’s authority to impose tariffs. Devashish Mitra, a professor of economics and global affairs at syracuse University, explained that the legality of the tariffs depends on whether a valid national security reason exists for their imposition.Critics argue that broad tariffs on goods like shirts and sheets are inappropriate and illegal.
Costco joins a growing number of companies, including Kawasaki and Revlon, in seeking refunds from the Trump administration should the Supreme Court invalidate the economic policy. Approximately one-third of Costco’s U.S. sales are derived from imported goods, primarily from china, Canada, and Mexico. The company specifically noted that imports from China have faced a minimum 145% tariff, impacting its orders.
While the Trump administration claimed the tariffs reduced the trade deficit and generated $205 billion in revenue for the federal government by 2025,the policies have considerably disrupted the retail sector and various industries. Companies have responded by attempting to restructure supply chains, sourcing from countries unaffected by the tariffs, or absorbing costs to minimize price increases for consumers.
Data from the National Bureau of Economic Research indicates that prices began to rise instantly after the tariffs were announced in early March and continued to increase, with imported goods experiencing roughly double the price increase of domestic products. Costco CEO Ron Vachris stated in a September earnings call that the company is committed to mitigating the impact of tariffs and will be among the last to raise prices,and the first to lower them when possible.
