Costco Challenges Tariffs: First Major Retailer to Sue Trump Administration

As many U.S. retailers navigate the complexities of tariff impacts on pricing, one major player is taking a bold step: Costco has filed a lawsuit against the Trump administration to reclaim tariffs it has paid this year. This action marks Costco as the first major retailer to challenge the government in court over these levies. Seeking a full refund, Costco lodged its case with the Court of International Trade just before a crucial December deadline, joining a lineup of other companies also pursuing legal recourse against U.S. Customs and Border Protection. The outcome of this lawsuit hinges on a Supreme Court ruling that will determine the legality of the tariffs imposed under the International Emergency Economic Powers Act, a law that traditionally has not addressed tariffs. Experts are mixed on Costco's strategy. Some analysts view the lawsuit as a prudent business decision, providing the retailer with a pathway to reclaim potentially significant amounts of money. Retail analyst Michael Baker noted Costco's strong position, stating, “They’re not alone in being impacted by tariffs... but Costco has the size and the clout with consumers, suppliers - and really everyone within the retail ecosystem - to potentially take action that won’t be viewed favorably by the administration.” Costco's unique market position has allowed it to push back against administrative policies that others might shy away from. For example, the warehouse retailer has maintained its diversity, equity, and inclusion initiatives in the face of industry-wide rollbacks, ultimately seeing an increase in foot traffic and a boost in sales during a time when competitors struggled. Recently, the retailer reported its net sales for the 2025 fiscal year reached an impressive $269.9 billion, an 8 percent increase from the previous year, alongside an 8.1 percent rise in November sales to $23.6 billion. Glenn McMahon, a former global retail executive, credited Costco with taking a firm stand on its values, saying, “Unlike all the other major retailers, [Costco] pushed back and said: ‘No, we believe that diversity, inclusivity and inclusion are important tenets of our brand.’” Costco's legal move comes amid significant scrutiny over the legality of tariffs that President Trump has labelled a national emergency. While Costco and other businesses await the Supreme Court's decision, should the ruling go against the administration, it is likely that customs officials will still delay refund processing. Marc Busch, a trade law expert, speculated that Costco's preemptive lawsuit was a necessary safeguard against potential political complications, noting, “I have a sneaking suspicion that whoever is advising Costco said: ‘It’s going to be a political quagmire, even if the Supreme Court says they’re illegal...’” Moreover, Costco’s business model allows it to employ tactics similar to its competitors, such as negotiating lower costs and selecting specific price points for products. Interestingly, the retailer has opted to lower prices on essential goods like fresh produce, while slightly increasing prices on non-essential items. This strategic pricing approach has helped maintain customer traffic, showing a 3 percent increase in same-store U.S. traffic in November compared to the previous year. The retailer has also continued to thrive in challenging economic climates, including inflation, by attracting value-driven consumers. Costco’s stock performance reflects this success, having surged 140 percent over the past five years. This loyalty and trust from its extensive membership base of over 145 million globally adds to Costco's resilience in this tumultuous economic situation.