Costco Sues Trump Administration Over Tariffs, Saying Emergency Powers Were Misused

Costco, the big-box retailer known as much for its oversized bulk goods as for its unusually high wages and low-cost food court staples, has filed a lawsuit challenging the legality of tariffs imposed during the Trump administration—an escalation in a growing corporate backlash against the former president’s trade policies.

In a complaint filed in federal court, Costco argues that former President Donald J. Trump invoked emergency authority not to address a genuine national crisis, but to unilaterally impose broad tariffs on imported goods. The company claims the move had little to do with national security and everything to do with Mr. Trump’s long-held political desire to portray himself as tough on trade.

The lawsuit centers on a simple economic reality: tariffs are paid not by foreign governments, but by American importers. One-third of the products Costco sells come from overseas, exposing the retailer to steep costs beginning in 2018. Rather than pass those costs directly to consumers, Costco absorbed a substantial portion internally, cutting into margins on staple goods from food to household essentials.

Executives determined the practice was unsustainable and now seek a full refund of the duties it paid—an outcome that hinges on a pending Supreme Court decision examining whether Mr. Trump exceeded his authority when he imposed the tariffs under Section 232 of the Trade Expansion Act, a Cold War–era law intended for true national emergencies.

Costco’s challenge is not isolated. Several major companies—including Revlon, EssilorLuxottica, Bumble Bee Foods, and Kawasaki—have either joined legal actions or signaled they may pursue their own claims. Collectively, they represent a cross-section of American manufacturing and retail, arguing that the tariffs distorted global supply chains while failing to deliver the promised benefits.

During oral arguments last month, the Court’s conservative majority appeared skeptical of the administration’s interpretation of emergency powers, raising the possibility of a sweeping ruling that could force the government to refund tens or even hundreds of billions of dollars to affected companies.

For Costco, the lawsuit also reflects its broader posture in an era of political polarization. Long regarded as one of the most worker-friendly large retailers in the United States, the company pays meat cutters roughly $31 per hour and warehouse stockers around $25 per hour, alongside comprehensive healthcare and retirement benefits. Labor economists often cite Costco as evidence that high wages and profitability are not mutually exclusive.

In contrast, Mr. Trump has advocated deregulation and lower labor costs as central to his economic vision. Costco’s challenge to his trade policies underscores a deeper philosophical divide: whether government should prioritize consumer protection and worker investment, or pursue a more confrontational and unilateral trade strategy.

The long-term effects of Mr. Trump’s tariffs may prove difficult to unwind. In industries like agriculture, China responded to U.S. duties by turning to alternative suppliers. Even if the tariffs were removed today, analysts say China would have little incentive to reverse established supply relationships.

As the Supreme Court weighs its decision, the lawsuit represents a significant test not only of a former president’s interpretation of executive authority, but of the broader economic consequences of a trade war that continues to reverberate across global markets.