Costco, a major retail corporation, has initiated legal action against the Trump administration, demanding reimbursement for tariffs that were collected under the International Economic Emergency Powers Act of 1977 (IEEPA). The company contends that these tariffs are illegal, as Congress did not authorize their collection under IEEPA. Costco's lawsuit highlights the inconsistent application of these tariffs, which have been frequently modified and re-imposed, causing market instability.

This lawsuit is part of a broader trend, as other companies, including Revlon and Kawasaki, have also sought legal recourse regarding the tariffs. The Supreme Court recently heard arguments in a related case, Learning Resources v. Trump, where justices expressed skepticism about the legality of the tariffs imposed under IEEPA. A ruling from the Supreme Court is anticipated in the coming weeks or months.

Costco's complaint emphasizes that the IEEPA was not intended to authorize tariff collection, as the statute does not mention tariffs or similar terms. Historically, IEEPA has been used to freeze foreign assets and seize property during national emergencies, but it has not been employed as a mechanism for generating revenue. The Trump administration has argued that the law's authority to regulate imports could be interpreted to include tariffs, and it has indicated a willingness to refund importers if the tariffs are deemed illegal.

The lawsuit underscores the complexities of tariff collection, which is managed by Customs and Border Protection (CBP), a division of the Department of Homeland Security. Importers like Costco must declare the value of imported goods and pay initial duties, which are later reviewed by CBP to determine final amounts owed or refunds due. Costco has raised concerns that, without judicial intervention, it may not be able to recover tariffs already paid, as federal courts have warned that importers may lack the legal right to refunds once duties are liquidated.

The Trump administration has often portrayed tariffs as a burden on foreign countries, suggesting that these nations bear the cost. However, evidence presented in court indicates that it is American companies and consumers who ultimately pay these tariffs. Chief Justice John Roberts has pointed out that tariffs effectively function as taxes imposed on Americans, a power that resides with Congress rather than the executive branch. If Costco and other plaintiffs succeed in their legal challenges, it could reveal the broader implications of the Trump administration's tariff policies and their impact on American businesses.