The Supreme Court Could End Trump’s Tariffs and Costco’s Ready to Cash In (Photo by Getty Images)
There is much more to the recent lawsuit that retail giant Costco filed against the US government than just a business dispute about import taxes. It is a crucial test of presidential power that goes right to the core of how American trade policy is decided, a high-stakes constitutional battle, and a multibillion-dollar financial rehabilitation project.
Fundamentally, the case raises the question of whether a president may unilaterally alter the country’s trading environment and impose high tariffs without the approval of Congress by declaring a national emergency. The Trump administration’s aggressive use of tariffs, especially those imposed on Chinese imports under Section 301 of the Trade Act of 1974, is the root of the issue. Costco’s lawsuit focuses on tariffs imposed under the International Emergency Economic Powers Act (IEEPA), even though those particular levies are not explicitly contested here.
This law, designed to allow the president to respond to “unusual and extraordinary threats” to national security, was invoked by President Trump to justify tariffs on steel and aluminum imports from various countries.
The administration argued that reliance on foreign metals constituted a national security emergency, thereby granting the executive broad authority. Costco, along with countless other importers, paid these levies under protest. Now, with the legal winds shifting, the retailer is moving to recover its funds. The company’s strategic lawsuit, filed in the U.S. Court of International Trade just before a critical December 2025 statute of limitations deadline, is a protective maneuver.
It seeks a judicial declaration that the IEEPA tariffs were illegal and an order for refunds, but only if the Supreme Court, which is currently reviewing the lower court decisions on the same issue, ultimately agrees. Two lower courts have already ruled against the Trump administration, finding that IEEPA was never intended to be used as a tool for imposing broad, revenue-generating tariffs and that doing so was an overreach of executive authority.
The financial enormity of the issue cannot be overstated. U.S. Customs data indicates that importers have paid approximately $90 billion under IEEPA-related tariffs. While Costco has not disclosed its specific share, the sum is undoubtedly colossal, affecting its bottom line and, by extension, the prices paid by its millions of members.
In its complaint, Costco states its business “has been injured” by the duties and expresses a justifiable fear that even a favorable Supreme Court ruling might not automatically trigger refunds without separate legal action. As their lawyers note, a “separate action is necessary” to secure “judicial relief,” highlighting the complex interplay between constitutional review and practical reimbursement.
The Supreme Court’s deliberation is the linchpin. During recent hearings, several justices exhibited skepticism toward the government’s position. Their questions suggested concern over the limitless nature of emergency power if it can be deployed for macroeconomic trade policy, a domain traditionally shared with Congress under its Constitutional power to “regulate Commerce with foreign Nations.”
A ruling against the government would not only vindicate Costco’s legal stance but could also unleash a flood of similar refund claims from thousands of affected businesses, potentially blowing a $90 billion hole in federal revenue and forcing a reassessment of how tariffs are collected and justified.
The political and ideological stakes are equally high. The Trump administration, and its successors who have maintained some of these policies, defend the tariffs as vital tools for national security and economic revival. A White House spokesperson emphasized the “enormous” economic consequences of overturning them, framing the suit as a threat to a lawful policy.
President Trump himself has consistently portrayed the tariffs as a financial windfall for the country, even promising futuristic citizen dividends from the revenue, a claim heavily disputed by most economists who argue the costs are largely borne by American consumers and businesses like Costco. Costco’s lawsuit, therefore, sits at a powerful nexus. It is a battle over the separation of powers, a massive corporate finance issue, and a referendum on a defining trade policy of the last decade.
A Supreme Court decision affirming the lower courts would be a historic rebuke of executive overreach, reasserting Congress’s crucial role in setting trade policy. It would also trigger one of the largest corporate refund efforts in history, with immediate impacts on federal budgeting and corporate balance sheets. Conversely, a ruling for the government would solidify expansive presidential authority in the name of national security, potentially opening the door for future executives to use emergency declarations as routine tools for economic policy.
Ultimately, beyond the legal arguments and the billions at play, the case underscores a perennial tension in American governance: the balance between agile executive action and deliberate legislative control. Costco’s calculated legal strike is not merely about reclaiming past payments; it is about defining the limits of power for futures yet to come. The Supreme Court’s resolution will not only determine who pays for the last chapter of American trade wars but will also write the rulebook for the next.
