Costco's Tariff Double-Dip: How the Wholesale Giant Got Sued for Charging Members Twice
For millions of Americans who rely on Costco's promise of low prices and bulk value, the past year and a half was quietly expensive. Between February 2025 and February 2026, prices crept upward on everything from electronics and small appliances to food and household goods — all because of sweeping federal tariffs that the United States Supreme Court would later declare unconstitutional. Now, Costco is facing a wave of class action lawsuits accusing it of something arguably worse than simply raising prices: collecting money from its own members and then turning around to collect that same money again from the federal government.
The central allegation is straightforward, if financially staggering. A proposed class action lawsuit filed in federal court in Seattle accuses Issaquah-based Costco Wholesale of billing its own members twice for the same tariff costs — first by raising prices on imported goods and then by pursuing a government refund for those same expenses. A separate but parallel suit has been filed in Illinois. Together, they represent a growing legal movement that could force one of the world's most profitable retailers to answer for how it navigated one of the most contentious trade policy periods in modern American history.
The Tariff Regime That Started It All
To understand the lawsuits, you need to understand the policy earthquake that preceded them. Beginning in February 2025, the federal government imposed sweeping tariffs on imports from numerous countries under the purported authority of the International Emergency Economic Powers Act, or IEEPA. Those tariffs dramatically increased the cost of imported consumer goods sold in the United States. The Trump administration framed the move as a necessary emergency measure — a tool to correct trade imbalances and bring manufacturing back to American soil.
The practical reality, however, was more immediate and personal. In February 2025, the Trump administration engaged in a trade war with several countries, including Canada, China, and Mexico, seemingly approved through the IEEPA. Major retailers across the country found themselves absorbing dramatically higher import costs almost overnight. Major U.S. importers — including Costco — responded by increasing prices on consumer goods to offset the cost of these tariffs. As a result, American consumers paid higher retail prices for consumer goods reflecting the economic burden of those tariffs.
Costco, as one of the country's most significant importers, was squarely in the middle of that pressure. About one-third of Costco's products are imported, and in 2024, the retailer ranked among the top 35 U.S. importers, according to the complaint. With such a deep dependence on international supply chains, the company had no clean way to insulate itself from the tariff regime — or so it claimed at the time.
The Supreme Court's Bombshell Ruling
Everything changed on February 20, 2026. The complaint was filed following a February 20, 2026, Supreme Court opinion in a case known as Learning Resources, Inc. v. Trump that invalidated all tariffs levied under the IEEPA, which were then terminated via executive order. The decision was 6-3, and its implications rippled immediately through corporate America. The suit follows the Supreme Court's ruling on Feb. 20, which held that President Donald Trump overstepped his authority in imposing tariffs under IEEPA, as the law doesn't grant tariff authority to the president.
That ruling did more than settle a constitutional question — it created an entirely new financial landscape. As a consequence of that decision, importers who paid those tariffs — including Costco — became entitled to refunds of the duties they previously paid to U.S. Customs and Border Protection. Shortly after, on March 4, 2026, the Court of International Trade ordered IEEPA tariffs refunded to all importers of record. U.S. importers and customs brokers were able to start filing refund claims on April 20, through an online portal launched by U.S. Customs and Border Protection.
The sheer scale of that refund process is difficult to overstate. The federal agency estimated that 330,000 importers paid about $166 billion on more than 53 million shipments as of March 4. Costco's slice of that could be enormous. The filing estimates that Costco is entitled to "hundreds of millions" in tariff refunds, with the total potentially surpassing one billion dollars.
The "Double Recovery" Problem
Here is where the lawsuits plant their flag. The plaintiffs' argument is not subtle: Costco charged its members higher prices throughout 2025 to cover the cost of tariffs it was paying to the federal government. Now that those tariffs have been declared illegal, Costco is positioned to get that money back from Washington — while the members who actually funded those costs get nothing. "Costco is poised to be paid twice for the same unlawful tariff burden: once by its customers (through elevated prices) and once by the U.S. government (through tariff refunds)," according to the complaint.
The case says that Costco was able to increase its profits and "expand margins" when the unlawful IEEPA tariffs were in effect. The suit, filed in an Illinois federal court in March, claims that the warehouse retailer generated "windfall profits" while passing increased costs on to consumers amid the tariffs. In other words, the plaintiffs are not just arguing that Costco was caught in an unfortunate policy situation — they're arguing the company actively benefited from one.
The Goldman Sachs data cited in the Illinois complaint sharpens the point considerably. If companies succeed in their refund claims, they will not be obligated to return money to their customers under federal trade law — this despite estimates from Goldman Sachs that U.S. consumers are "shouldering two-thirds of President Trump's new tariff costs." That gap between who paid and who gets refunded is the legal and moral core of what plaintiffs are fighting over.
What Costco's Own Executives Said
Critically, the lawsuits don't rely on inference or circumstantial evidence. They lean heavily on Costco's own public statements. The plaintiffs say Costco publicly acknowledged during earnings calls and in other statements that tariffs were affecting its costs, merchandise decisions, and pricing.
The lawsuit cites a May 2025 earnings call in which Gary Millerchip, Costco's chief financial officer, said prices were raised for certain products from Central America and South America "because we felt that was something that the member would be able to absorb." It's a quote that now reads very differently in a courtroom context than it did on an investor call — an explicit admission that the company knowingly passed costs to consumers because it judged they could handle it financially.
Costco CEO Ron Vachris also confirmed the price increases during earnings calls. The lawsuit quotes Vachris acknowledging what happened, with the CEO saying "we did increase some price [sic] there because we felt that was something that the member would be able to absorb." Those words, now embedded in court filings, represent exactly the kind of contemporaneous executive acknowledgment that makes plaintiffs' attorneys salivate.
Regular shoppers noticed too. The case cites a post made on Reddit in September 2025 where one user commented they had noticed "significant price increases on [a] majority of the items." An October 2025 Facebook comment cited in the filing similarly notes that despite seeing "price hikes" at most grocery stores, Costco's price increases were "higher than most." The social media record filled in what the earnings calls implied: that the price hikes were real, noticeable, and broad.
Costco's Defense: Nothing to Return Yet
Costco has not sat idle. On May 18, Costco's lawyers asked the court to dismiss the lawsuit, claiming that Stockov's lawsuit shouldn't be allowed to proceed because the company has not yet received any refunds for the tariffs it paid to the federal government. "Costco has received no tariff refunds yet," the motion to dismiss reads, arguing that the lawsuit "depends entirely on a series of uncertain future events."
In the filing, the company also denied that it had misled its members, and that it raised prices in response to "market forces." It's a legally defensible framing — market forces is, broadly speaking, why any business raises prices — but critics argue it sidesteps the specific question of whether Costco now has an obligation to compensate customers when those same market forces are about to produce a massive government windfall for the company.
On the question of what would happen to any eventual refund, CEO Vachris offered something of an answer, though it satisfied no one in the plaintiff camp. The lawsuit points to public comments from Costco CEO Ron Vachris saying any tariff refunds would be used to give customers lower prices and better value in the future. The suit argues that would benefit future shoppers, not the people who paid the higher prices during the tariff period. The distinction matters enormously: the people who stood at checkout counters in 2025 and paid inflated prices are not necessarily the same people who will benefit from slightly lower prices at some unspecified point down the road.
There's also compelling evidence, embedded in the complaint itself, that the pass-through was real and not just coincidental. The complaint says Costco later reduced prices on some items after tariff pressure eased, which the plaintiffs argue shows the earlier tariff costs had been passed through to customers. The price reductions function as a kind of retroactive admission — if tariff costs were "market forces" and not passed to consumers, why did prices come down when those forces dissipated?
Multiple Lawsuits, Multiple Jurisdictions
The Seattle Case
The lawsuit was filed in the U.S. District Court for the Western District of Washington against Issaquah-based Costco Wholesale Corp. It was brought by seven named plaintiffs from Washington, Ohio, California, and Pennsylvania who say they bought imported goods from Costco during the tariff period and paid more because the retailer passed those costs along to customers. The lawsuit includes claims for unjust enrichment, money had and received, and violations of the Washington Consumer Protection Act.
The Illinois Case
Costco customer Matthew Stockov has filed a federal lawsuit in Chicago to prevent the company from "double recovery," benefiting twice from the refund process. The suit also claims that Stockov and other Costco members paid "unfairly elevated" prices for the items they purchased from the retailer that were imported from other countries, especially China, which has faced some of the steepest tariffs. According to the suit, Costco imports roughly one-third of the goods it sells from other countries, with eight percent coming from China.
Stockov also claims that Costco engaged in "deceptive trade practices" by presenting itself to consumers as a value-oriented retailer while significantly raising prices. This angle is particularly pointed given Costco's brand identity: the entire value proposition of a Costco membership rests on the promise that prices inside those warehouses will be lower than anywhere else. Using the tariff crisis as cover to expand margins while trading on that reputation, the suit argues, crosses a legal and ethical line.
Stockov's lawsuit seeks to force Costco to pay any refunds it receives from the federal government back to its members, with interest. He's also asking the court to determine appropriate financial compensation for those who paid higher prices while the tariffs were in effect.
The Class Definition
The breadth of potential class membership here is staggering. The Costco class action lawsuit seeks to cover all individuals in the United States who purchased from any Costco retail channel any good subject to the tariffs imposed under IEEPA, during the period February 1, 2025 through February 24, 2026. The Illinois version of the suit narrows geography for state-law claims: the proposed class action looks to include Costco customers in the U.S. who purchased a product subject to IEEPA tariffs between Feb. 1, 2025, and Feb. 24, 2026, residing in Illinois, California, Florida, Michigan, Missouri, New Jersey, New York, Ohio, Washington, and Wisconsin.
Plaintiffs invoke a long list of state consumer protection laws, including the Illinois Consumer Fraud and Deceptive Business Practices Act, New York General Business Law, California Unfair Competition Law, Florida Deceptive and Unfair Trade Practices Act, Washington Consumer Protection Act, New Jersey Consumer Fraud Act, Missouri Merchandising Practices Act, Michigan Consumer Protection Act, Ohio Consumer Sales Practices Act, and the Wisconsin Deceptive Trade Practices Act. The multi-state approach is deliberate — it prevents Costco from arguing that a single state's law doesn't apply and maximizes the legal pressure from multiple directions simultaneously.
Costco Was Already Playing Both Sides
One of the more remarkable threads in this story is that Costco had already been fighting the tariffs long before the Supreme Court ruled them unconstitutional — and it did so not out of altruism toward its members, but as a company protecting its own financial interests. Costco filed its own case in the U.S. Court of International Trade on Nov. 28, 2025, challenging the tariffs and seeking refunds of duties it paid, according to the complaint.
Costco brought the action in its capacity as a U.S. importer that had paid duties under the challenged tariff regime. In that action, Costco sought declaratory and injunctive relief invalidating the IEEPA tariffs and requested refunds of all duties collected from Costco under those tariff orders. Costco's lawsuit was one of many similar actions filed by importers challenging the IEEPA tariff regime. Those cases were consolidated with related litigation pending in the Court of International Trade and were stayed pending the Supreme Court's resolution of the legality of the tariffs.
The timeline that emerges is damning in its symmetry: Costco raised prices on consumers starting in February 2025, challenged the tariffs in court as an importer in November 2025, and then became eligible for government refunds when the Supreme Court ruled in February 2026. Every step served the company's financial interest. The lawsuit contends that Costco, along with nearly 2,000 other companies, is attempting to "recover" tariff refunds from the federal government, and the complaint states that "they seem likely to succeed."
The Broader Industry Picture
Costco is not alone in the legal crosshairs. Other companies, including Lululemon, FedEx, Nintendo, and Ray-Ban maker EssilorLuxottica, also face lawsuits from customers. Lululemon, like Costco, is accused of "double recovery" regarding the unlawful tariffs. The Costco cases are part of a broader wave of consumer litigation that followed the Supreme Court's ruling, as shoppers across the country began to reckon with the fact that they had spent a year paying for tariffs that the government itself has now agreed were illegal.
The Federal Reserve Bank of New York found that U.S. businesses and consumers bore 86% of the tariff burden, while foreign exporters bore 14% as of November 2025. That figure — nearly nine-tenths of the entire tariff cost absorbed domestically — underscores why the litigation is so significant. Companies like Costco didn't simply absorb the tariff as a cost of doing business. They passed the overwhelming majority of it through to consumers, and now they stand to be made financially whole by Washington while their customers remain out of pocket.
Existing avenues to pursue tariff refunds exist through the U.S. Court of International Trade, where thousands of companies have filed suit to recover those funds. Costco is among the more than 2,000 companies that have filed suits in the U.S. Court of International Trade seeking to recover tariffs they paid for imported goods. What the consumer class action suits now argue is that those refunds — funded by American taxpayers through duties that were illegally collected — should flow back not to corporate balance sheets but to the millions of ordinary shoppers who ultimately paid the freight.
What This Means for Costco Members
For the roughly 76 million Costco cardholders in the United States, the lawsuits represent an unusually direct shot at recovering real money. Plaintiffs seek restitution for "tariff overcharges" and other types of relief. The practical challenge will be quantifying exactly how much any individual member overpaid, across what product categories, over a period of roughly a year. That accounting will likely require discovery into Costco's internal pricing models — documents the company will almost certainly resist producing.
The membership model that Costco has built its entire brand around actually cuts both ways in this legal fight. According to the lawsuit, Costco runs on a membership model where consumers pay an annual fee to access "low pricing on a vast array of goods." That promise of low pricing is simultaneously the foundation of the deceptive trade practices claim and the reason Costco's members feel particularly betrayed. Unlike a one-time transaction at a random store, members made a deliberate, paid commitment to Costco's value proposition. Finding out that the company then used an emergency tariff crisis to pad margins while hiding behind the rhetoric of unavoidable cost pressures stings differently when you pay $65 or more annually for the privilege of shopping there.
The company operates 924 warehouses worldwide, with over 68% in the United States. Last month, it reported a second-quarter profit of $2 billion, compared with $1.8 billion for the same period a year earlier. That profit growth, occurring precisely during the period when tariffs were highest and prices were elevated, will likely feature prominently in any trial narrative the plaintiffs construct.
The Road Ahead
Costco's motion to dismiss in the Illinois case is a predictable first move — argue the lawsuit is premature because no refund has been received, and hope the court agrees that an injury hasn't fully crystallized. That argument may buy time, but it likely won't dispose of the case entirely. The company has already acknowledged it raised prices. The Supreme Court has already declared those tariffs illegal. The Court of International Trade has already ordered refunds. The legal machinery pointing toward Costco's eventual receipt of a massive government check is well in motion.
The lawsuit states that it aims to prevent Costco from "double recovery" and profiting from a situation that caused consumers financial hardship. Whether courts agree that consumers — rather than importers — are the rightful recipients of tariff refunds is a novel legal question, one that no prior trade policy situation has quite forced in this way. The IEEPA tariff regime was unprecedented in its scope and speed; the legal fallout following its invalidation is similarly uncharted territory.
What is clear is that the era of treating tariff pass-throughs as an invisible, consequence-free mechanism may be coming to an end. Consumers now have legal standing, organized class counsel, and a Supreme Court ruling in hand. The question courts will ultimately have to answer is whether a company that collected money on behalf of an illegal government mandate and is now recovering that money from the government has any obligation to close the loop with the people who wrote the original check — willingly or not — at the warehouse checkout line.
