The wholesale giant Costco has initiated a legal challenge against the federal government, contesting the legal foundation of broad tariff measures implemented under emergency authority. The lawsuit, filed in the U.S. Court of International Trade, argues that the executive branch overstepped its statutory powers in imposing these duties and seeks to secure potential refunds for importers.
The core of the dispute centers on the application of the International Emergency Economic Powers Act (IEEPA). Costco’s filing contends that this law, invoked to justify the tariffs, grants the president specific powers only to address declared national emergencies and does not authorize the imposition of tariffs. The company’s legal argument emphasizes that the text of IEEPA does not include the word “tariff” or any equivalent term.
This legal action comes as the Supreme Court deliberates on the broader constitutionality of the tariff program. During recent oral arguments, several justices expressed skepticism, with the Chief Justice noting that the imposition of taxes has traditionally been a core legislative power of Congress.
Costco asserts its lawsuit is time-sensitive due to procedural rules enforced by U.S. Customs and Border Protection (CBP). The agency “liquidates,” or finalizes, an importer’s total duty obligation 314 days after goods enter the country. Legal precedent suggests that once this liquidation occurs, importers may lose the right to reclaim duties even if those tariffs are later ruled unlawful. Costco’s suit aims to prevent this liquidation for the contested tariffs to preserve its right to a potential refund.
Beyond halting the liquidation process, the retailer is asking the court to declare the tariffs illegal, order a stop to their collection, and mandate refunds for duties already paid. CBP has not publicly commented on the pending litigation.
The financial stakes of the tariff program are significant. According to recent federal budget data, total tariff collections surged to approximately $195 billion in the last fiscal year, a substantial increase from the $118 billion collected the previous year. Monthly collections reportedly grew from around $7 billion to $30 billion over the same period.
While Costco has not specified its total tariff payments, the company has previously stated that imports account for about one-third of its U.S. sales, with nearly half of those goods sourced from China, Mexico, and Canada.