Target has found itself in a true “damned if you do, dammned if you don’t” dilemma.

Some media coverage and consumer commentary have characterized the company as socially liberal (‘woke’), while others criticized it for changes to its diversity, equity, and inclusion (DEI) policies in response to political pressures.

“For the past two years, it’s found itself at the center of America’s culture wars, drawing the ire of conservatives and progressives alike. For some consumers, popping into Target (or refusing to) has turned into a political statement, though it’s not clear what statement it even makes,” Emily Stuart wrote for Business Insider.

Target clearly had socially liberal policies, based on common-sense solutions baked into its brand identity. Instead of taking a stand on gender identity, for example, the chain allowed customers to use the facilities of the gender they identify as.

It also added a single-person restroom to every store, so customers who are uncomfortable with being around any sort of person in a bathroom, no matter who that might be, had the solo option.

Target has tried to walk a tightrope, and it has fallen off more than once, alienating both liberals and conservatives. Now, Costco has quietly done something that runs the risk of angering President Donald Trump, a man who has shown a willingness to speak his mind when he feels wronged.

Costco has sued the Trump administration

Costco’s leaders have avoided making any political statements, but they have not kowtowed to Trump’s demands. While Target and Walmart dropped DEI language in their worker policies, Costco kept its after an overwhelming board vote supporting them, Fortune reported.

Now, the warehouse club finds itself alone on an island again as it has sued the Trump administration over the tariffs the president has imposed on imported goods from various countries.

“Costco was among the largest of more than 1,000 retailers that sued, arguing that the president had exceeded his emergency powers in enacting some of the tariffs…Oral arguments in November went badly for the administration, and prediction markets currently put 70% odds on the Supreme Court overturning the tariffs,” Semafor reported.

Target and Walmart opted not to join that lawsuit.

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The Costco lawsuit before the Court of International Trade asks the court to consider all tariffs collected under the International Emergency Economic Powers Act unlawful.

“Because IEEPA does not clearly authorize the President to set tariffs … the Challenged Tariff Orders cannot stand and the defendants are not authorized to implement and collect them,” Costco’s lawyer writes in the lawsuit, CNBC reported.

Costco generally acts in the best interests of its members.

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Costco lawsuit FAQ:

  • What is the Costco lawsuit about? Costco Wholesale filed a lawsuit in the U.S. Court of International Trade challenging tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and seeking to secure refunds for duties it has paid, arguing the president lacks authority to impose broad tariffs under that statute, according to Reuters.
  • Why did Costco sue now?: Because U.S. Customs and Border Protection is soon “liquidating” (finalizing) tariff duties. Once liquidated, it becomes much harder, or impossible, to get refunds, even if tariffs are later found unlawful. Costco says it needs its own court judgment to preserve refund rights, reported JD Supra.
  • What relief is Costco asking for? Costco wants the court to:
    Declare the IEEPA tariffs unlawful.

    Prevent further tariff collection.

    Order full refunds of duties it has paid.

    Source: Costco’s lawsuit filing

  • A separate, consolidated case questioning whether the IEEPA gives the president authority to impose tariffs is currently before the U.S. Supreme Court. Its decision will be key to the legal backdrop of Costco’s suit, according to Reuters.

Costco has tried to reduce expoure to tariffs

Costco has been open about its efforts to mitigate the impact of tariffs for its members.

“Our buyers continue to do a great job reducing the impact of tariffs for our members. The strategy is being deployed to achieve this include changing the country of production for some items, sourcing more items produced in the U.S., consolidating buying efforts globally to lower the cost of goods across all our markets, and leaning into Kirkland Signature, where we have more control over the supply chain,” CFO Gary Milerchip said during its first-quarter earnings call.

He also shared that “lumpy sales” months have been caused by “uncertainty around tariffs.”

Data from Harvard Business School shows that tariffs are impacting American consumers.

Harvard Business School professor Alberto Cavallo has been tracking prices on over 35,000 items.

“The impact on retail prices keeps accumulating, and that’s what worries me,” said Cavallo, who has paired his research on the impact of tariffs with a live Tariff Tracker showing the ongoing effect by country and product category.

“The Trump administration has always believed that if they put on the tariffs, foreign exporters will be pressured to lower their prices,” Cavallo said. “But we find that it’s mostly U.S. firms and the U.S. consumers who end up paying.”

Overall, Cavallo’s research found that tariffs have increased the Consumer Price Index (CPI) by 0.7% since March, soon after Trump began imposing tariffs.

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