Costco’s Challenge to Tariffs Highlights Key Refund Considerations for Importers

Over the past year, many importers of goods from countries such as Canada, Mexico, and China have been required to pay additional tariffs implemented by President Trump under the International Emergency Economic Powers Act (IEEPA). A number of companies, including Costco, have challenged those tariffs in federal court. Depending on how the U.S. Supreme Court rules on the legality of these tariffs later this year, importers may be entitled to significant refunds of tariffs that are ultimately deemed impermissible. Because refund rights can be lost if procedural steps are missed, importers should closely monitor these cases and determine whether action is needed to preserve potential refunds.

The Challenged Tariffs

In early 2025, relying on the IEEPA, President Trump imposed tariffs on goods imported from countries including Canada, Mexico, and China, asserting that illicit drug inflows and trade imbalances were national emergencies permitting such action. The Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal Circuit concluded that these IEEPA tariffs were unlawful in V.O.S. Selections, Inc. v. United States.

The government appealed and, in November 2025, the U.S. Supreme Court heard oral argument. A final decision is expected by this summer but could come sooner. If the Supreme Court agrees with the plaintiffs that the tariffs were unlawful, importers may be entitled to refunds of duties already paid.

Lawsuits Amidst the Pending Decision

While the Supreme Court’s decision is pending, numerous importers, including Costco, have filed lawsuits seeking to block liquidation and receive refunds of IEEPA tariffs already paid. These lawsuits are largely driven by timing concerns related to U. S. Customs and Border Patrol’s (CBP) liquidation process. “Liquidation” is the point at which CBP finalizes the duties owed on an import entry. Once an entry liquidates, an importer typically has 180 days to challenge the liquidation by filing a protest. Without a protest, the liquidated entry becomes final and refund rights can be lost. Some importers, including Costco, filed suit before liquidation, concerned that post-liquidation procedural complications could foreclose refund rights.

The Court of International Trade’s Recent Guidance

Many of these refund cases, including Costco’s, have been consolidated before the CIT. On December 15, 2025, the CIT declined to issue an emergency order blocking liquidation. In doing so, the CIT emphasized two important points.

First, in simple terms, the court accepted the government’s promise that it would not oppose refunds. The government has represented that if the Supreme Court ultimately invalidates the IEEPA tariffs, it will not oppose reliquidation of entries to refund unlawful duties. The CIT held that the government would be bound by its representation.

Second, the CIT held that it has the authority to order reliquidation in these cases. It explained that when a case challenges the constitutionality or legality of a statute or presidential action, CBP lacks authority to resolve that issue through the normal protest process. In those circumstances, the CIT may hear the case under its so-called “residual jurisdiction” (28 U.S.C. § 1581(i)), even if no protest was filed.

Accordingly, the CIT concluded that the plaintiffs had not shown immediate, irreparable harm, and thus an emergency order blocking liquidation was unnecessary. The CIT then paused the consolidated cases pending the Supreme Court’s final decision.

Takeaways for Businesses

Importers of record should take steps now to review and preserve any rights they may have in the future to receive tariff refunds. First, importers should work with their customs brokers to maintain detailed entry and liquidation records pertaining to IEEPA tariffs. Second, importers should ensure they are positioned to receive refund payments electronically. As of February 6, 2026, the U.S. Treasury Department ceased issuing paper checks for all CBP refunds, unless the recipient has an approved waiver.

While awaiting the Supreme Court’s decision, importers have some actions to consider.

1. File a protective lawsuit now ahead of the Supreme Court ruling. Filing a lawsuit would involve disregarding the CIT’s December 15 opinion and asserting the CIT’s residual jurisdiction. Although it provides the greatest procedural certainty, filing a lawsuit involves upfront legal costs and litigation effort.
2. File protests for all IEEPA related entries as they liquidate. The deadline to protest is 180 days after liquidation, so importers choosing this option may have time to await CBP’s guidance if the Supreme Court finds that the IEEPA tariffs are unlawful. This requires timely tracking of liquidation dates.
3. Wait and take no action for now. This option takes the CIT’s guidance at face value and simply waits for the Supreme Court’s decision with the expectation that refunds can be sought later if the tariffs are invalidated.

The three paths offer a choice between caution and efficiency. While actions two and three may ultimately succeed, they carry greater risk. Courts are not strictly bound by prior interim rulings, and future jurisdictional or procedural hurdles could arise. An importer that takes no action now may later face arguments that it waited too long or failed to preserve its rights.

Filing a lawsuit now and protesting entries as they liquidate might be the most conservative approach, but not necessarily the right choice for every business. The appropriate strategy depends on risk tolerance, potential refund exposure, and desire for certainty. Please contact your Reinhart attorney if you’d like to discuss your options.