How Costco suing Trump helps business and stoke loyalty | Fortune

It was in that spirit that Costco last autumn became one of the first major companies (along with the likes of Revlon and motorcycle-maker Kawasaki) to sue the Trump administration over its “Liberation Day” tariffs regime. Its strategy was vindicated on Friday, when the U.S. Supreme Court slapped down those tariffs as unconstitutional.

Costco was seen at the time as taking a big risk by being the most prominent U.S. company to publicly oppose President Trump, on his signature issue at that, at a time many CEOs seemed (as they still do) to live in terror of landing in the president’s crosshairs. Still, this was not an ideological move, but rather a classic Costco business move.

In its filing last December with the U.S. Court of International Trade, Costco said its lawsuit was intended to ensure it was eligible for a full refund if the Supreme Court rejected the administration’s rationale for tariffs collected under the International Emergency Economic Powers Act. The suit made headlines that have only strengthened Costco’s reputation for looking out for its customers.

Costco has never said how much in duties it has paid, but the retailer has said about one-third of its products sold in the U.S. are imported—so it is likely to be no small sum. (One estimate, calculated by Penn Wharton Budget Model economists calculated for Reuters, is that more than $175 billion in U.S. tariff collections in all might have to be refunded.) The Supreme Court said nothing about the refunding process in its decision, leaving that an open question, and Justice Brett Kavanaugh said in his dissent that the refund issue “is likely to be a mess.”

Trump later in the day responded to the decision by announcing new 10% global tariffs under a different statutory authorization.

Costco, which posted revenue of $275 billion in its most recent fiscal year, has said a number of times that it has managed to cope with the tariffs, changing up its assortment when a new tariff made an item too pricey. “Our buyers continue to do an excellent job finding new and exciting items at great values while also adjusting our assortment to minimize the impact of tariffs,” Costco CFO Gary Millership told Wall Street analysts on an earnings call in December. Costco did not immediately respond to a request comment on the Supreme Court decision.

Butt out, please

Costco has a history of pushing back on outside attempts to force it to change how it runs is business. That includes outside decisions that could force it to change what it sells to customers. Costco offers a tiny selection compared to the likes of Walmart, Amazon, and Target, with an assortment of about 4,000 items compared to 100,000 and other big-box stores. That means it can ill afford a misfire, a risk amplified by these tariffs.

We saw that Costco ethos in action last year when the company pushed back attempts by activists to force it to drop its DEI (diversity, equity and inclusion) programs, in contrast to a rush by many Fortune 500 companies to mollify Trump and his supporters by rolling them back.

“As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction … And we believe (and member feedback shows) that many of our members like to see themselves reflected in the people in our warehouses with whom they interact,” the company said in a statement last year in response to an activist shareholder’s anti-DEI proposal. The takeaway with Costco always amounts to: “Let us run our business as we see fit.”

Costco has endured “Go woke, go broke” boycott threats, but the retailer’s business has continued to thrive in recent years. It turns out that many Trump supporters are members too, and as such they’re like most Costco aficionados: too addicted to Costco’s knack for surprising merchandise and staples at attractive prices to give it up.

That brings us right back to why Costco took the lead among major retailers to fight the tariffs in the first place: maintaining its options for which merchandise it sells and protecting its ability to keep prices low.