Costco sues Trump administration as tariff backlash intensifies

Costco has become the largest U.S. company yet to sue the Trump administration over its tariff policy, joining other importers seeking to protect their ability to obtain refunds if the Supreme Court strikes down the duties as unlawful.

Costco (Nasdaq: COST) contends that Trump used an emergency-powers law to impose tariffs on goods from China, Mexico, Canada and dozens of other countries, even though the law does not permit the president to levy tariffs absent a legitimate “unusual and extraordinary” national security threat.

The administration misused emergency powers to enact what amounted to a universal import tax, Costco said in the lawsuit.

Tariff collections have surged under the Trump administration, with U.S. customs duties increasing from $118 billion in fiscal year 2024 to $195 billion in fiscal year 2025, according to federal budget data cited in the lawsuit.

Costco said it filed the lawsuit to ensure its “right to a complete refund is not jeopardized,” citing fears that once its tariff bills are “liquidated,” or finalized by U.S. Customs and Border Protection, the retailer may lose its legal avenue to contest them. The liquidation process begins Dec. 15, and importers typically have just 180 days to challenge assessments.

The lawsuit arrives as the Supreme Court weighs the legality of Trump’s trade actions, with oral arguments beginning in early November. If the Supreme Court overturn the duties, experts say the government could face an unprecedented influx of refund claims

Dozens of importers — including Revlon, Bumble Bee Foods, and Kawasaki — have filed similar lawsuits to Costco’s in recent months, hoping to receive refunds if the Supreme Court ultimately dismantles the tariff regime,” according to NPR.

In a recent interview on the “WTF” podcast with Nikhil Kamath, Tesla CEO Elon Musk said he personally urged Trump not to implement broad tariffs, warning they “create distortions in markets” and could harm the economy.

Musk said tariffs between states or cities would be viewed as “disastrous,” questioning why barriers between countries were any different.

“Would you want tariffs between you and everyone else at an individual level? That would make life very difficult,” Musk said. “Would you want tariffs between each city? No, that would be very annoying. Would you want tariffs between each state within the United States? No, that would be disastrous for the economy. So then, why do you want tariffs between countries?”

Automaker Tesla (Nasdaq: TSLA) halted some vehicle orders in China this spring due to retaliatory Chinese tariffs as high as 125%, a move Musk has said underscores the risks of escalating trade conflicts.