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In a significant legal challenge, warehouse club leader Costco has initiated litigation against the Trump administration, contending that its use of emergency powers to impose sweeping tariffs oversteps constitutional limits. The retailer is seeking a refund for tariffs paid and asking the court to stop the duties.

Legal Grounds: Exceeding Statutory Authority

The lawsuit, lodged with the Court of International Trade, focuses on the administration's use of the International Emergency Economic Powers Act (IEEPA). Costco asserts this federal statute was misapplied to impose the duties. Citing the statute's text, the retailer noted that IEEPA grants powers only to deal with an "exceptional national threat" and crucially "omits the word ‘tariff’ or any term of equivalent meaning".

"The vehicle is the imposition of taxes on Americans, and that has traditionally remained a fundamental authority of Congress," said Chief Justice John Roberts during prior court proceedings.

A Race Against Time

While the Supreme Court is set to decide on the legality of the duties this spring, Costco's lawsuit argues swift judicial intervention is necessary. The reason stems from federal procedures known as "liquidation," where the customs agency finalizes tariff amounts roughly ten months following goods enter the country. After this process finalizes, legal precedent suggests importers could forfeit the ability to recover refunds, "even where the original lawfulness of a tariff is subsequently ruled to be unlawful".

Consequently, should the Supreme Court strikes down the tariffs, Costco fears it could be unable to recover funds already paid if an excessive period has passed.

What Costco Seeks

Through its petition, Costco is asking the trade court to:

• Rule the Trump-era tariffs illegal.
• Stop the ongoing imposition of these tariffs.
• Mandate reimbursement for any duties the retailer has previously remitted.
• Block finalization of its customs bills to preserve its right to a future repayment.

The Financial Stakes

The magnitude of tariff revenue has skyrocketed. Data shows overall duty revenue in fiscal year 2025 jumped to $195 billion, a sharp increase 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 specific tariff bill, it has indicated that roughly one-third of its U.S. sales are derived from imported goods, with almost 50% sourced from China, Mexico, and Canada.

This lawsuit highlights the continuing conflict between presidential power and congressional prerogatives over trade policy, with vast sums of money potentially hanging in the balance.