US President Donald Trump Photo: Andrew Caballero-Reynolds/AFP/Getty Images via CNN Newsource
Analysis by Elisabeth Buchwald, CNN
Costco just broke ranks with the majority of corporate America, suing the Trump administration on Friday for allegedly overstepping its authority to impose sweeping tariffs this year - and demanding its money back if the Supreme Court ultimately strikes them down.
The case, which was argued in the Supreme Court last month, revolves around whether President Donald Trump had the legal authority to impose tariffs by citing a law known as the International Emergency Economic Powers Act. Trump used those powers to push import tax rates as high as 50% on key trading partners, including India and Brazil, and as high as 145% on China earlier this year. In total, the tariffs have cost US importers as much as $90 billion as of late September, according to US Customs and Border Protection figures.
If the justices find Trump lacked the authority to impose the tariffs, the question then becomes who, besides the five small businesses challenging the Trump administration in the Supreme Court case, would be eligible for a refund and how would that process work? As Justice Amy Coney Barrett pointed out during oral arguments last month, the potential refund process could be "a mess."
In anticipation of potential refunds, many businesses have been privately requesting extensions from CBP for when their tariff payments will be considered finalized, a process that could take several months to complete because of how complicated the tariff code is. Preventing the tariff payment from settling essentially makes it easier down the road to potentially get a refund.
So why, then, is Costco taking a different, more forceful approach that is so clearly at odds with the administration's agenda?
Costco didn't specify in the filing how much the contested tariffs have cost the company. Photo: 123RF
Money talks
Costco's lawyers wrote in the complaint filed with the Court of International Trade that the wholesale giant, along with many other importers, isn't automatically guaranteed a refund if the Supreme Court rules against the Trump administration.
Furthermore, the filing claimed CBP denied multiple requests Costco made for finalizing tariff payments.
Trump, who referred to the case in a Truth Social post last month as "LIFE OR DEATH for our Country," could also take measures to make it more onerous for businesses to get refunds, if it comes down to it.
"The economic consequences of the failure to uphold President Trump's lawful tariffs are enormous and this suit highlights that fact," White House spokesperson Kush Desai told CNN in a statement.
All that is pushing Costco to go the extra mile even if it means putting a target on its back with the administration as a result, said Marc Busch, a professor at Georgetown's School of Foreign Service who studies trade policy and law.
"They're clearly not convinced that the Supreme Court is going to even speak to the hassle of companies getting a refund or the government organizing a systematic process by which that happens," he said and fully expects more companies to follow Costco's lead.
Costco didn't specify in the filing how much the contested tariffs have cost the company. The wholesale retailer didn't respond to CNN.
White House press secretary Karoline Leavitt Photo: AFP / Getty Images / Alex Wong
High risk, high reward?
Costco's strongly worded lawsuit and implied criticism of Trump's tariffs - claiming they were imposed in a "pell-mell manner … with the markets gyrating in response" - risk putting the company in hot water with the White House.
Amazon learned this the hard way after it reportedly planned to display how much tariffs were contributing to some items' prices. White House press secretary Karoline Leavitt labeled it a "hostile and political act," sending shares of the company lower. After an irate Trump called Amazon founder Jeff Bezos, the e-commerce giant said it would not display tariff-related price increases.
Since then, Amazon and other big-box retailers have mostly avoided actions that could invite a similar confrontation. They've also been sitting silently on the sidelines as the tariff case plays out, even though they too have, at a minimum, tens of millions of dollars riding on the outcome of the case.
But sitting on the sidelines bears a cost, too.
If Costco didn't sue the Trump administration, the company could "be in a position where the tariffs are ruled unlawful, but they still can't get their money back," said Emil Stefanutti, CEO of Gaia Dynamics, an AI-powered trade compliance platform.
"For a company their size, that could mean absorbing very high, potentially unrecoverable costs."
- CNN
