Customer sues Costco for tariff refunds

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Natalie ShermanBusiness reporter

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A Costco customer in the US is suing the retail giant, seeking refunds for shoppers who paid more due to tariffs that have now been declared illegal.

The proposed class action lawsuit is a sign of the complexities looming over the roughly $166bn (£124bn) in tariff refunds the US owes to companies since the Supreme Court decision last month.

Importers paid those taxes when they brought the goods into the country, but in many cases at least some portion of the cost was passed on to distributors and customers in the form of higher prices.

“The truly injured parties possess no direct avenue for redress,” Costco customer Matthew Stockov contends in his complaint.

The Supreme Court ruling left the refund process in the hands of the Court of International Trade, which has ordered the government to start returning money.

But there is significant uncertainty as to when that might happen - and who might benefit.

Citing a Goldman Sachs report that estimated that consumers were “shouldering two-thirds of President Trump’s new tariff costs”, Sockov argues that Costco is in the position to recoup tariff costs twice, “from customers through elevated pricing and from the government”.

In his complaint, which was filed against Costco in federal court in Illinois, he argues that amounts to “unjust enrichment” and asks the court to order the firm to refund shoppers.

Costco, one of the thousands of businesses that is seeking refunds, did not respond to a request for comment.

Speaking to analysts after reporting earnings this month, chief executive Ron Vachris said it remained unclear “what refunds, if any, will be received”, adding that in many cases the company had not passed on the “full cost” of the duties.

“As we have done in the past, when legal challenges have recovered charges passed on in some form to our members, our commitment will be to find the best way to return this value to our members through lower prices and better values,” he added.

“We will be transparent in how we plan to do this if and when we receive any refunds.”

Other firms also face the issue of how to deal with refunds.

Delivery giant FedEx, which handled the tariffs on behalf of many businesses and individuals, is among the companies that has pledged to refund money it receives to the businesses and consumers that had faced tariff charges.

Last week, the Trump administration told the court it needed 45 days to create a new electronic process to handle the task, warning that its current systems would otherwise be overwhelmed.

It said more than 330,000 different importers were eligible for refunds as a result of the decision, which struck down tariffs Trump had imposed on dozens of countries under a 1977 emergency law known as the International Emergency Economic Powers Act (IEEPA).

“Existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency’s trade enforcement mission,” Brandon Long, executive director of the agency’s trade programmes said in a court filing.

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