The bell rings, on one side of the ring is Costco and on the other, nothing more and nothing less than the Donald Trump Administration. There is a battle, there is a fight. And everything began because the company has decided to take the government itself to court to recover all the tariffs it paid under the IEEPA law, claiming that Trump overstepped and did not have authority to impose them, December is coming in strong!
The case has escalated to the Supreme Court, where the judges have begun to ask very uncomfortable questions about a trade policy that, in total, has collected more than 200,000 million dollars… And it is not only about money, but because what is decided here could change how economic policy works, and Costco is the visible face of this problem, but there is a long list of companies that are waiting to jump on the resolution of this case to receive their refund.
Costco in court.
From the company, they claim that the Trump administration relied on the International Emergency Economic Powers Act to impose tariffs without going through Congress, something like creating a trade policy that benefited them to make money.
So, under this pretext, the company demands that the tariffs paid be returned, and although the ruling does not specify how much money we are talking about, almost 90,000 million dollars are being claimed (wow). And the tension returns of turning American trade policy into an electoral battlefield…
The impact on Costco and its prices
To understand well what is happening, we have to know that one third of Costco’s sales in the US come from imported products, so, every dollar that has been added to the tariff has gone directly to costs.
Fresh foods (especially bananas, pineapples, various fruits) have been the most affected, but Costco decided not to increase prices on these products by considering them basic, its customers depend on them to have a healthy diet, so consumers did not notice anything, but the company’s accounts did.
And the Supreme Court?
Well, before it was a business fight, but now it is a matter of State. The Supreme Court has agreed to review the legality of the tariffs, and during the hearings, conservative and liberal judges seemed very unconvinced by the government’s defense. The most important thing we can take from this event are the consequences, the first is that if they strike down the tariffs, the Government would have to return billions of dollars to companies, and if they validate them, any future president could impose tariffs without asking permission from Congress. Either scenario is quite complicated.
Only Costco?
No, Costco has opened the path, but companies like Revlon, Kawasaki, EssilorLuxottica and Yokohama have also joined the fight because they find themselves in the same situation.
What is at stake?
From the White House, they defend that the tariffs are “necessary to protect the economy”, but the reality is that tariffs raise the prices of products in stores and it is consumers who end up paying for everything…
Costco, for example, has had to redesign global purchases and move production so that the bill does not explode…
The political dimension of the conflict
For Trump, this case is pure political ammunition, his team has asked for a “quick and appropriate” resolution because every second that passes can affect the polls…