Costco Wholesale Corp (NASDAQ:COST) has taken legal action against the Trump administration, challenging the legality of tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Costco Demands Full Refunds
Costco filed a lawsuit on Friday with the Court of International Trade, seeking a complete refund of all duties collected under the IEEPA. The company contends that the act does not explicitly grant the president authority to impose tariffs, making them legally invalid.
The lawsuit highlights concerns over whether all businesses that have paid the duties would be eligible for refunds if the Supreme Court rules the tariffs unlawful. Costco is seeking urgent court action after Customs and Border Protection rejected its request to postpone the timeline for finalizing tariff determinations.
Several companies have filed similar lawsuits in a U.S. trade court since late October, challenging President Trump’s use of the IEEPA to impose the levies. These companies include Revlon Consumer Products Corp and Kawasaki Motors Manufacturing Corp.
Tariff Decision Rests With Supreme Court
Meanwhile, the U.S. Supreme Court is leaning toward announcing a decision on Trump's emergency tariff powers under the 1977 IEEPA law, which could nullify up to $145 billion in tariffs.
However, economists caution that a ruling against the tariffs may not immediately remove existing trade barriers. Prediction markets saw odds of the Court upholding the tariffs fall sharply to 21%.
Goldman Sachs economist Alec Phillips predicts that financial implications, potentially $115–$145 billion in collected tariffs, could take much longer to resolve, with refunds likely delayed and requiring court involvement.
Costco’s Plan To Mitigate Tariff Impact Strategically
This move by Costco comes after the company announced its plans to mitigate the impact of tariffs by increasing the production of items under its Kirkland Signature brand. The company’s executives had stated that they were working closely with their suppliers to find ways to offset the tariff-induced costs.
Earlier, Costco had reported a strong financial performance in the fourth quarter of fiscal 2025, beating revenue and earnings estimates. Despite acknowledging the impact of tariffs on its business, the company had expressed confidence in its ability to mitigate challenges using its global buying power and supplier relationships to reduce price increases.
Costco will release its fiscal Q1 results after markets close on December 3. Analyst Joseph Feldman of Telsey Advisory Group maintains an Outperform rating with a $1,100 price target, citing Costco's strong sales, high membership renewal rates (~145 million members), and continued profitable market share gains.
Benzinga's Edge Rankings place Costco in the 86th percentile for quality and the 95th percentile for growth, reflecting its strong performance in both areas. Check the detailed report here.
Price Action: Costco stock dropped 13.71% over the past six months, per Benzinga Pro. On Tuesday, it fell 0.18% to close at $911.96.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
