Costco will put the tariff refund it expects to recover under a recent court ruling toward lower prices for members rather than cash back to shoppers, a decision that has already drawn a class-action suit.
The backdrop: The Supreme Court struck down the IEEPA emergency-powers tariffs in February, and a trade court then ordered Customs to refund the duties importers had paid. The refund pool across all importers runs to an estimated $166 billion.
On its latest earnings call, Costco said it had begun filing claims but did not put a figure on what it expects back.
The dispute: CEO Ron Vachris said Costco's plan is to "return to our members in some form the portion of tariffs that were passed on to them," meaning member value rather than direct cash to the shoppers who paid. Customers pushed back.
A class-action suit argues the refunded duties belong to them, since they covered the cost through higher prices, and not to Costco's margin.
How others are handling it: Costco is an outlier. A CNBC survey of 25 large-company CFOs found none planning to share their refund with customers.
Deere booked its $272 million refund straight to margin, telling investors it is "not surcharging" customers and not cutting prices.
Walmart has applied for refunds that could top $2.4 billion but will not commit to passing them on.
FedEx, UPS and DHL are returning the money, though they only fronted the duty on other companies' goods, so it costs them nothing.
Costco is the only big retailer (so far) that marked the tariff into shelf prices and then promised to hand the refund back.
Why it stands out: Customs is cutting each refund whether or not the importer ever ate the tariff, so for most companies the money is a margin windfall by default.
That makes Costco's pledge unusual, and the lawsuit a test of whether promising to return "value" obligates a company to actually write checks.
What's next: Importers have to claim refunds on the specific entries where they paid the duty, through Customs and Border Protection, within deadlines tied to when each entry cleared. How much Costco recovers, and whether the court forces it to share, will play out over months.
