In a significant legal escalation, the American wholesale retail giant Costco has filed a lawsuit against the Trump administration, challenging the sweeping use of emergency powers to impose billions in tariffs. The company argues the White House has exceeded its executive authority and is seeking urgent court intervention to protect potential refunds.
A Challenge to Presidential Authority
The lawsuit, filed at the US Court of International Trade last Friday, centres on the administration's use of the International Emergency Economic Powers Act (IEEPA). Costco contends this law was misapplied. "IEEPA grants the president certain power, but they ‘may only be exercised to deal with an unusual and extraordinary threat’," the company stated, directly quoting the statute. It further pointed out that the law "does not use the word ‘tariff’ or any term of equivalent meaning".
This legal action follows a pivotal hearing at the US Supreme Court in November, where justices, including Chief Justice John Roberts, expressed scepticism. Roberts noted during arguments that imposing taxes has "always been a core power of Congress." A ruling from the highest court is expected in the spring of 2026.
The Race Against 'Liquidation'
Costco's lawsuit underscores a critical and urgent financial risk for importers. US Customs and Border Protection (CBP) finalises, or 'liquidates', tariff payments 314 days after goods enter the country. Federal courts have warned that once this liquidation occurs, importers may lose the legal right to reclaim duties, even if those tariffs are later deemed unconstitutional.
"This creates a perilous situation," the filing implies. Costco fears that by the time the Supreme Court rules, the deadline for many of its tariff payments will have passed, barring it from recouping potentially unlawful charges. The company is asking the court to halt this liquidation process for the contested tariffs immediately.
Billions at Stake in Trade Policy
The scale of the financial impact is vast. According to the Committee for a Responsible Federal Budget, total tariff collections soared to $195bn in the 2025 fiscal year (ending September 2025), a dramatic jump from $118bn the previous year. Monthly collections skyrocketed from around $7bn in January 2025 to $30bn by September.
While Costco has not disclosed its exact tariff bill, the company has revealed that a third of its US sales are derived from imports, with nearly half of those goods sourced from China, Mexico, and Canada. In its suit, Costco requests the Court of International Trade to declare the tariffs illegal, stop their collection, and order a full refund of all duties already paid under the challenged authority.
The legal battle places a spotlight on the balance of power between the executive and legislative branches in US trade policy, with billions of dollars in global commerce hanging in the balance. CBP did not immediately respond to requests for comment on the ongoing litigation.
