Costco files lawsuit against Trump administration to obtain full refund for tariffs.

Costco Wholesale Corporation has initiated a legal challenge against the Trump administration aimed at halting and recovering tariffs imposed earlier in the year under the International Emergency Economic Powers Act (IEEPA). The retail giant contends that the authority granted to the president under IEEPA has been exceeded in this instance, asserting that the act does not encompass the imposition of tariffs.

The IEEPA, enacted in 1977, is intended to provide the president with the means to regulate economic transactions following a declared national emergency. Costco argues that while the law grants specific powers to the executive branch, those powers are limited to addressing “unusual and extraordinary threats” that have been formally recognized as emergencies. The lawsuit challenges the legality of the tariffs and points out that the terminology surrounding tariffs is conspicuously absent from the law, implying that the powers granted should not extend to tariff imposition. Furthermore, Costco notes that despite multiple amendments to the IEEPA over several decades, none have explicitly authorized the imposition of tariffs by any president.

Earlier judicial decisions have already set a precedent regarding the legality of such measures. A ruling from the U.S. Court of International Trade in Manhattan, as well as a Federal Circuit decision in Washington, deemed previous tariffs instituted by the Trump administration illegal. The case has now escalated to the Supreme Court, where it was heard last month. During the proceedings, several justices raised concerns regarding the scope of presidential power to impose such tariffs across a broad array of goods from multiple countries.

Should the Supreme Court side with Costco and rule against the administration, it could open avenues for importers to seek refunds on tariffs that have already been paid. While the extent of any potential refunds remains uncertain, the prospect has prompted proactive legal measures from numerous businesses. Experts, including Brent Skorup from the Cato Institute, indicate that many companies, Costco included, are preemptively filing actions in the U.S. Court of International Trade to secure their claims to possible refunds.

Costco’s lawsuit, filed with the U.S. Court of International Trade on November 28, seeks a refund to ensure it does not lose the opportunity to recoup the tariffs already paid. The warehouse retail leader has not specified the total amount it is pursuing in refunds but has expressed concern about safeguarding its interests as Customs and Border Protection prepares to liquidate tariffs on an estimated basis beginning December 15. As the situation continues to unfold, the implications of the Supreme Court’s decision are likely to reverberate throughout the larger economic landscape.