News Flash Highlights:

  • Last month,the Supreme Court ruledAfter the Supreme Court invalidated President Trump's authority to impose broad tariffs under the 1977 International Emergency Economic Powers Act (IEEPA), Costco Wholesale CEO Ron Vachris said Thursday that the company is committed to passing any tariff refunds it receives back to customers.
  • "As we have done in the past when recovering fees through legal challenges, our commitment will be to find the best way to return member value through lower prices and better valueto members," Vachris said during the company's earnings call (according to a Seeking Alpha transcript). "We will be transparent about how we plan to do this—if we do receive any refunds."
  • Vachris addressed the tariff topic at the start of the call. The day before, the U.S. Court of International Trade (CIT) directed U.S. Customs and Border Protection (CBP) torevoke the invalidated tariffs. He said these tariffs were "significant" for Costco's customers and shareholders, and noted the situation remains "highly fluid" because the IEEPA tariffs have been replaced by new tariffs that will remain in effect for at least "the next 150 days."

In-Depth Analysis:

In late November, the Issaquah, Washington-based companysued the Trump administration, seeking a court declaration that the IEEPA tariffs were unlawful and demanding a "full refund." Costco is one of many companiesseeking refunds through the courts,along with others such as Revlon Consumer Products and Bumble Bee Foods. After the Supreme Court's ruling on the matter, FedEx is among the notable companies that have filed lawsuits.

The path to refunds may be long and bumpy, but companies gained some clarity this week. Senior Judge Richard Eaton of the Court of International Trade on Wednesdayordered CBP to liquidate unprocessed U.S. import entriesand to reliquidate processed but not yet final entries—according to Supply Chain Dive, a sister publication of CFO Dive. Liquidation is essentially the final process of determining the total duties owed.

On the earnings call, Vachris emphasized the ongoing complexity and uncertainty of the tariff and refund process, saying "it is unclear how the process will work, whether refunds will be received, and when." But he said the company, through ongoing tariff mitigation strategies—including controlling stock-keeping unit (SKU) counts and sourcing more products domestically with controllable supply chains—is capable of handling the impact "as well as any business."

"We will continue to be the price benchmark, and as some tariffs have been reduced, we are lowering prices on affected items, such as certain textiles, bedding, and cookware SKUs," Vachris said.

The company's uncertainty is not limited to tariffs. CFO Gary Millerchip said that in the most recent quarter, inflation in food and grocery categories eased slightly, driven mainly by deflation in produce, eggs, and dairy, but this trend was partially offset by a slight uptick in inflation for non-food items—some areas affected by tariffs. He also noted that the situation in Iran could impact inflation.

"In the second quarter, inflation slowed to low single digits, I believe," Millerchip said on the call. "But I would add... that was the second quarter. Obviously, the world has changed somewhat since we released that update, so we have to watch how the situation in the Middle East evolves."

In the second quarter of fiscal 2026, which ended February 15,Costco reported net income growthto $2.04 billion, compared with approximately $1.8 billion in the same period last year; net sales increased 9.1% year-over-year to $68.24 billion.