Costco Sues Trump Administration for Full Refund of Reciprocal Tariffs
If Trump loses, how messy will refunds be? PS Trump will lose.
Costco v. U.S. CUSTOMS AND BORDER PROTECTION
Filed in the US Court of International Trade, please consider Costco v. U.S. CUSTOMS AND BORDER PROTECTION
This Court and the Federal Circuit have held that IEEPA does not authorize these
tariffs.Through this action, Plaintiff asks the Court to hold for it exactly what it and the Federal Circuit already held in V.O.S. Selections: that the IEEPA duties imposed by Defendants, and the underlying executive orders that directed them, are unlawful
The Supreme Court heard oral argument in V.O.S. Selections and a companion case arising out of the U.S. District Court for the District of Columbia on November 5, 2025, and is expected to rule in the near future.
This separate action is necessary, however, because even if the IEEPA duties and underlying executive orders are held unlawful by the Supreme Court, importers that have paid IEEPA duties, including Plaintiff, are not guaranteed a refund for those unlawfully collected tariffs in the absence of their own judgment and judicial relief.
And this action is necessary now because the entries for which Plaintiff paid tariffs imposed under authority of IEEPA will in general begin to become liquidated as early as December 15, 2025 (indeed, as of this filing, one such entry has already liquidated). Plaintiff seeks relief from the impending liquidations to ensure that its right to a complete refund is not jeopardized (and to that end intends to file a motion for a preliminary injunction to suspend liquidation—CBP denied Plaintiff’s request to extend liquidation for entries subject to IEEPA tariffs, thus necessitating the motion for a preliminary injunction).
Accordingly, for itself, Plaintiff seeks (i) a declaration that the IEEPA duties are unlawful; (ii) an injunction preventing Defendants from imposing further duties on it under the executive orders challenged in this lawsuit; and (iii) full refund from Defendants of all IEEPA duties Plaintiff has already paid to the United States as a result of the executive orders challenged in this lawsuit, as well as those it will continue to pay.
The Costco lawsuits refers to the Court of International Trade which ruled against Trump.
An en banc (full) appeals court also ruled against Trump.
On November 9, the Supreme Court heard oral arguments that did not appear to go well for Trump.
Why Costco Is Suing
CNN explains Why Costco Is Suing Trump.
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’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.
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.”
I commend Costco for standing up to Trump’s unconstitutional order.
I expect a 6-3 ruling against Trump that in practice ought to be unanimous.
Court Case History
May 28, 2025: Court of International Trade Strikes Down Trump’s Liberation Day Tariffs
This is an enormous ruling. 5 Reasons the court is correct. ….
Trump was begging for this ruling with nonsense like declaring movies a national security threat.
August 27, 2025 Can Trump’s Tariff Revenues Help Pay for the Federal Budget Deficit?
It would be amazing if the appeals court ruled for Trump. But the key question is how the Supreme Court will rule.
Hypothetical Vote Count
The three liberal justices are certain to vote against Trump. That means we need two more.
Pair 1: Barrett and Roberts
Pair 2: Barrett and Gorsuch
Pair 3: Gorsuch and RobertsIf I am correct, I think Barrett is already on board. I can’t help but think Roberts will go with the majority, and perhaps decide.
If it’s pair 2, add Roberts for a 6-3 decision. The bigger the majority, the more cover for all of them.
August 29, 2025: Full Appeals Court Rules 7-4 Against Trump’s Reciprocal Tariffs
In a very much expected (by me) ruling, the appeals court rejects Trump’s global tariffs.
November 5, 2025: Supreme Court Oral Arguments Hint Trump May Lose on Reciprocal Tariffs
Driving the news: The court heard oral arguments on Wednesday in a challenge to a slew of Trump’s tariffs, including the “Liberation Day” levies and a separate set imposed on Canada, Mexico and China.
- At least two of the likely swing votes in this case — Chief Justice John Roberts and Justice Amy Coney Barrett — indicated they may be inclined to slap down, or at least curb, the lion’s share of the tariffs.
- “The vehicle is imposition of taxes on Americans, and that has always been a core power of Congress,” Roberts said during the arguments.
What Are the Odds the Supreme Court Rules Against Trump on Tariffs?
On November 16, 2025, I addressed the question What Are the Odds the Supreme Court Rules Against Trump on Tariffs?
Swing Votes for This Case
- John Roberts
- Amy Coney Barrett
- Neil Gorsuch
Importantly, this is not a for-against Trump vote. This is a serious set of issues. And there are three of them, not two that I mentioned above.
- Did Congress delegate tariffs to the Executive?
- Can Congress delegate tariffs to the Executive?
- IF yes to both of those, then does the amount create a major questions issue?
Gorsuch and Barrett strongly questioned Sauer on points 2 and 3.
Barrett also questioned Sauer on point 1.
Question 2 is a strong constitutional question. Gorsuch and Barrett both seemed firm with questions on how once delegated, could Congress ever get pack powers ceded to the executive.
In essence, the set of three questions above is about the integrity of the constitution and separation of powers. Gorsuch and Barrett are clearly very concerned.
Yet, even IF a majority is willing to side with Trump on points 1 and 2, Trump still needs to survive point 3, the major questions issue.
And it was the major questions issue that sunk Biden’s student loan forgiveness ploy. Trump’s boast making this a $2 or $3 trillion collection does not help his own case! See What Should We Make of the Biggest Trump Tariff TACO Yet? for Trump’s claims and further discussion.
In summation, Trump needs to win on three of three issues (on two of three of Barrett, Roberts, and Gorsuch, while holding all of Thomas, Alito, and Kavanaugh).
Note that Polymarket currently has Trump’s odds of winning at 24 percent. Those odds crashed on the oral arguments.
And 24 percent roughly matches the logic I presented above.
Please note this is going to come down to the same three justices I mentioned on August 27 before the en banc Appeals Court ruled against Trump.
Trump Doubles Down on Economic Idiocy
November 28, 2025: Trump Doubles Down on Idiotic Idea of Using Tariffs to Replace Income Tax
Once again, Trump says tariffs can replace the income tax.
To replace income tax with tariffs, Trump would have to charge (and collect) $2.4 trillion in tariffs on $3.27 on imports.
That implies a tariff rate of 73.4 percent on all imports, without a decline in imports.
This is obvious economic idiocy, spouted by an obvious economic idiot.
Is Trump Really That Stupid?
Since Trump has repeated this nonsensical message many times, it’s at least possible, if not probable that Trump really is as stupid as he sounds.
It’s also possible Trump is laying the blame for when the Supreme Court rejects his reciprocal tariff stupidity.
I suspect it is some of both.
Latest Odds Trump Wins
Polymarket: 26%
Kalshi: 24%
Mish 25%
Ruling When?
From Morningstar: 22V Research analyst Kim Wallace said in a recent note that “many lawyers expect a mid-December determination.” Oral arguments in Trump’s case against Federal Reserve governor Lisa Cook are scheduled for Jan. 21 at the court, and that “likely supports expectations of a December IEEPA ruling,” added Wallace, a senior managing director at 22V and head of the research firm’s Washington policy risk team. He also said he expects the high court will rule against the Trump administration.
I have no opinion on the validity of Kim Wallace’s date reasoning. But I do know Trump requested an accelerated review and I am reasonably sure the Court will oblige.
That’s why I have been saying December or January, for some time.
Tariff Refunds
CATO discussed On “Emergency” Tariff Refunds: There’s an Easy Way and a (Very) Hard Way
As I and my Cato colleagues explained in our amicus brief to the Court, [Mish Note: See Section E Refunds of IEEPA tariff revenue need not be administratively difficult] refunds could be administratively burdensome for both the government and US importers. But they needn’t be—and several strong reasons support the government choosing the easy route. To begin with, we note that almost everyone—the Trump administration, US courts, former customs officials, and legal experts—has acknowledged that duty refunds are possible, if not required.
The government has acknowledged the feasibility of duty refunds in these cases,[1] and “[c]ourts have long recognized that when duties or tariffs are later invalidated, the government cannot lawfully retain those amounts.”[2] As the former acting general counsel at U.S. Department of Homeland Security recently stated, “customs officials regularly process refunds,” and U.S. lawyers regularly request them.[3]
We go on to explain that ample precedent exists for the US government to issue blanket duty refunds quickly and easily to US importers owed that money. A similar system could be used to refund the “emergency” tariffs.
U.S. Customs and Border Protection (CBP) has issued broad, automatic refunds when required to do so. For example, the March 2018 renewal of the Generalized System of Preferences (GSP) program required both retroactive application to January 1, 2018 and the refund of any duties collected on GSP-eligible merchandise—including entries that had already been liquidated—during the months in which the program had lapsed.[4]
If instructed by the Court to do so, CBP could use such a system to refund most of the IEEPA [International Emergency Economic Powers Act] tariffs. For all entries on which IEEPA duties have been paid, CBP has instructed importers to report at least one Harmonized Tariff Schedule of the United States (HTSUS) “Chapter 99” secondary classification related to the IEEPA tariffs at issue.[7] CBP could use these codes to find all relevant entries and refund IEEPA-related duties automatically via the agency’s Automated Clearinghouse (ACH) Refund Program.[8]
Finally, we explain why any other approach to duty refunds in this case would indeed be a giant mess and highly unfair to smaller US importers who deserve to be repaid in a speedy and equitable manner.
An individual refund process—involving a separate Post Summary Correction for each unliquidated entry and administrative protest for each liquidated entry—would be burdensome for U.S. importers and highly inequitable.[9] During Fiscal Year 2024, CBP processed approximately 105,103 entries of merchandise each day[10]—totals that have surely climbed in 2025 as millions of daily “de minimis” packages are now also subject to both IEEPA tariffs and formal entry requirements.[11] If, instead of blanket refunds, the government required every importer to affirmatively request a refund from CBP (and file administrative protests to keep claims alive in the meantime), it would not only advantage large, sophisticated importers over smaller ones—denying the latter finite resources illegally commandeered by the government—but also impose a significant burden on an already-stretched CBP.
Costco Forces Court’s Hand
Although it’s clear the Administration should be forced to rebate the tariffs. It’s not clear they will.
I suspect the lawsuit by Costco may force the court’s hand. If the tariffs are illegal, Costco has a very strong case.
And unlike the headless chickens at Amazon, Costco protected its rights.
One possible complication is the poor discussion by the plaintiff in the Supreme Court oral arguments. I pointed that out in my take on November 16.
On Paying Back the Tariffs
JUSTICE BARRETT: And then if you win, tell me how the reimbursement process would work. Would it be a complete mess? I mean, you’re saying before the government promised reimbursement. And — and now you’re saying, you know, well, that’s rich, but how would this work? It seems to me like it could be a mess.
MR. KATYAL: So the first thing I would say is that just underscores how major a question this is, the very fact that you are dealing with this with quotas, there’s no refund process of — to the tunes of billions of dollars or embargoes, but there is here. But for our case, the way it would work is, in this case the government’s stipulated for the five plaintiffs that they would get their refunds. So for us that’s how it would work.
Your question, I take it, is about everyone else. We don’t have a class action or anything like that. With respect to everyone else, there’s a whole specialized body of trade law. And 19 U.S.C. 1514 outlines all these administrative procedures. It’s a very complicated thing.Mish Interjection: Admitting it was necessarily a complicated mess was a mistake. The tariffs were collected and receipts issued. Although it would take a while, conceptually the process should be simple. But the big point Katyal made is that complications show this is a “major question” issue. He recovered …
JUSTICE BARRETT: So a mess.
MR. KATYAL: We don’t — we don’t deny that it’s difficult, but I think what this Court has said in — in — in the McKesson case in 1990, a serious economic dislocation isn’t a reason to do something.
Katyal was not prepared for an obvious question. He should have responded as CATO did with “The Easy Way”.
Hopefully the Court reads the CATO’s amicus brief to the Court.
Adding it all up, the Court is going to have a very difficult time avoiding the refund issue and a difficult time not granting them.
Still, it’s not a given. Since Costco filed its lawsuit in the Court of International Trade, perhaps the Supreme Court avoids further wrath of Trump by letting the trade court handle the mess.
At a minimum, I expect Costco to win refunds if the Supreme Court rules against Trump. I see little reason to change my odds from ~25 percent I came up with on November 16.
Here’s the link again for my full judge-by-judge breakdown: What Are the Odds the Supreme Court Rules Against Trump on Tariffs?