Will Costco's Lawsuit Against Trump Succeed? Experts...

By Robert Alexander

Senior Crime & Court Reporter

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Costco Wholesale Corporation has filed a lawsuit against the U.S. government challenging President Donald Trump's sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

In a complaint submitted to the U.S. Court of International Trade (CIT) on November 28, the company argued that the administration exceeded its statutory authority and that the duties it was required to pay were unlawful.

Why It Matters

Costco's challenge to Trump's tariff regime is far more than a corporate bid for refunds. The case strikes at the heart of how much power the president can wield under emergency authorities, with billions of dollars in duties and consumer prices hanging in the balance.

As the Supreme Court weighs whether Trump overstepped his authority by using the IEEPA to impose sweeping tariffs, Costco and dozens of other companies are racing to preserve their right to recover what they've already paid.

The outcome could redefine the limits of executive power, reshape U.S. trade policy and determine whether businesses—and ultimately shoppers—bear the cost of the administration's unprecedented tariff experiment.

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Experts on Refund Scope and Case Strength

In a series of exclusive interviews with Newsweek, legal and trade experts examined the likelihood of Costco's case succeeding and how much it could end up costing.

Jennifer Hillman, a co-director of the Center for Transnational Legal Studies, told Newsweek that the Costco lawsuit "may be part of a very large wave of suits following the CIT's decision in V.O.S. Selections," noting that cases brought by small businesses and by 12 states—led by Oregon—raised a key question: Do refunds, if the tariffs are ultimately ruled illegal, apply only to the named plaintiffs or to every importer who paid the duties?

She said the Court of International Trade initially held that illegal tariffs would have to be refunded uniformly because "U.S. law requires that tariffs be uniform throughout the United States," but the appeals court sent that question back for reconsideration in light of the Supreme Court's ruling limiting nationwide injunctions.

Hillman also said she believed "there is a good chance (I give it a six or seven out of 10) that the Supreme Court will rule that at least some of the IEEPA tariffs are illegal." She acknowledged that she "may be biased," as counsel to members of Congress who submitted briefs argued that the IEEPA provided no tariff authority.

Hillman added that Costco's case focused on the tariffs imposed for fentanyl and trade-deficit reasons, and that—depending on how much it imported under the IEEPA tariffs—the company "should be entitled to a refund of 100 percent of their IEEPA duties plus interest."

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Wendy Cutler, the senior vice president at the Asia Society Policy Institute, previously spent almost 30 years at the Office of the U.S. Trade Representative, serving as a top diplomat, negotiator and acting deputy. She told Newsweek, "This week’s filing by Costco for tariff rebates in many ways underscores the uncertainty surrounding the impact and follow-up to a potential ruling by the Supreme Court against the use of IEEPA as the legal basis for reciprocal tariffs."

She added, "We should not be surprised by other companies following Costco's lead to ensure that they are eligible for tariff rebates."

Kathleen Claussen, a professor of law at Georgetown University, said the Costco filing had attracted attention largely because of the company's name recognition, adding that "there's nothing particularly special about it" and that Crowell & Moring had filed many similar cases on behalf of other importers.

She continued, "We do not have a lot of information yet about how this will play out," emphasizing that "there are many possible pathways that refunds could take" and that an environment of uncertainty had led firms to preserve clients' rights while weighing the risk of "drawing too much attention or ire by going the litigation route."

Claussen also said the Court of International Trade could eventually consolidate the growing number of related cases, as it did with the Section 301 complaints involving more than 4,000 importers.

A High-Stakes Legal Battle Over Emergency Tariff Powers

The suit comes at a critical moment. The Supreme Court is already reviewing whether the IEEPA authorizes the president to impose tariffs in V.O.S. Selections v. Trump, a consolidated case argued on November 5. Costco said both the Court of International Trade and the U.S. Court of Appeals for the Federal Circuit had previously held that the IEEPA did not grant the president tariff-setting power.

As the complaint recounts, the Federal Circuit found that Congress "did not clearly delegate to the President the authority to impose tariffs under IEEPA." It warned that reading the statute to allow such power would raise "grave constitutional concerns."

Despite that precedent, Costco said it must independently seek relief because importers were "not guaranteed a refund for those unlawfully collected tariffs in the absence of their own judgment and judicial relief."

The company argued that the timing of tariff liquidations—some beginning as early as December 15—could otherwise prevent it from recovering duties already paid.

The complaint said U.S. Customs and Border Protection denied Costco's request to delay liquidation, prompting the lawsuit.

How Tariffs Work and Why Costco Says Refunds Are at Risk

Costco has paid duties on a continuous basis under new tariff codes created after the White House issued multiple orders imposing additional levies on goods from Canada, Mexico and China.

These include a 25 percent tariff on imports from Mexico and Canada and layered tariff increases on Chinese goods, some of which resulted in combined rates exceeding 100 percent.

The financial impact on the retailer is substantial, though Costco has not disclosed exact figures in its filing.

In May, Chief Financial Officer Gary Millerchip said, per Bloomberg, that about one-third of the company's U.S. sales were from imported goods, including products heavily affected by Trump's tariffs.

He added that Costco had increased prices on discretionary items, such as flowers, while holding down prices on staples—such as pineapples and bananas—even when that reduced margins.

CEO Ron Vachris said in September that the company would "do everything we can to mitigate tariff impacts," adding, "If we do [increase prices], we are going to be the last one to go up and always the first one to go down."

A Growing Industry Response as Tariff Costs Mount

The broader economic consequences of the tariff program are notable.

According to The Washington Post, the administration collected about $88 billion in IEEPA-based tariffs through September and was projected to raise $2.3 trillion over the next decade.

Costco is one of dozens of companies—including Kawasaki Motors, Bumble Bee Foods, EssilorLuxottica, Revlon and Yokohama Tire—that have filed suits to protect potential refund rights amid the legal uncertainty surrounding the tariffs.

The outcome of Costco's case will be shaped heavily by the Supreme Court's forthcoming decision.

During oral arguments, justices from across the ideological spectrum appeared skeptical about the legality of Trump's use of the 1977 emergency powers law to impose tariffs.

If the court rules that the IEEPA does not authorize tariffs, Costco's challenge will likely succeed.

If the court upholds the president's authority, Costco's alternative argument—that such power would violate the Constitution's nondelegation principles—faces a more uncertain path.

Either way, the case underscores the stakes for businesses navigating a volatile trade landscape shaped by presidential emergency powers.

What People Are Saying

President Donald Trump wrote in an executive order on April 2: "I, DONALD J. TRUMP, President of the United States of America, find that underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners' economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits, constitute an unusual and extraordinary threat to the national security and economy of the United States."

Ron Vachris, Costco's CEO, said in September: "We are taking a very offensive approach to this where we are going to do everything we can to mitigate tariff impacts. The last effect would be we pass on price. If we do that, we are going to be the last one to go up and always the first one to go down in any opportunities we have out there."

What Happens Next

The next phase of Costco's lawsuit hinges on two parallel developments: an impending Supreme Court ruling on whether Trump legally used the IEEPA to impose sweeping tariffs and Costco's urgent effort to block liquidation of its import entries so it can preserve its right to refunds.

If liquidation proceeds, duties become final and nonrefundable, making Costco's planned motion for a preliminary injunction critical.

The outcome of the suit could expose the U.S. to billions in potential refunds or, if the tariffs are upheld, force retailers to continue adjusting supply chains and pricing strategies under Trump's expanded tariff regime.

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