Costco built its business around a fairly simple promise. People pay for membership, and they get the lowest possible prices the chain can deliver.
The warehouse club offers the lowest prices of all major chains, according to a recent Consumer Reports study.
The data showed that the warehouse club charged an average of 21.4% less than Walmart, which was used as the baseline for the report.
“Prices were collected in person from store shelves in late summer 2025. Within metro areas, all prices were collected within a 48-hour period. The amounts shown reflect sale prices and discounts available to shoppers using free store loyalty cards but don’t reflect manufacturer coupons or savings available only through smartphone apps,” the consumer advocacy website shared.
Now, Costco has made another price-related move that will delight its members.
Costco takes a stand on tariffs
In February, Costco took the bold step of suing the federal government over the tariffs placed on imported goods by the President Donald Trump administration.
“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.
The chain wasn’t making a political statement. It was preserving its right to go after a tariff-related refund, should the tariffs be declared illegal.
That, of course, happened, as the Supreme Court struck down the tariffs.
“In a major ruling on presidential power, the Supreme Court on Friday struck down the sweeping tariffs that President Donald Trump imposed in a series of executive orders. By a vote of 6-3, the justices ruled that the tariffs exceed the powers given to the president by Congress under a 1977 law providing him the authority to regulate commerce during national emergencies created by foreign threats,” ScotusBlog reported.
Now, Costco has made a bold promise to members if it gets a refund on any tariffs it paid to the U.S. government.
Related: History of Costco: Company timeline and facts
Costco will give tariffs back
Costco CEO Ron Vachris spoke expansively about tariffs during the warehouse club’s second-quarter earnings call.
“The future impact of tariffs remains extremely fluid, as the recently eliminated AIPA tariffs have now been replaced with new global tariffs for at least the next 150 days. Our buyers continue to act with great agility and urgency, always with the goal of reducing the impact of tariffs on prices for our members,” he said.
He was also clear that a lot of uncertainty remained over any potential refunds due to the Supreme Court decision.
“Regarding IEPA tariff refunds, it is not yet clear what the process will be, what refunds, if any, will be received, and when this will happen. Throughout the past year, we have taken action to reduce the impact of tariffs; in many cases, we did not pass the full cost on to our members,” he said.
More Costco:
- Costco credit card change gives it a $1,000 edge on Sam’s Club
- Costco members saddened over discontinued items
- Bank of America revamps Costco stock price before earnings
Should there be a refund, however, Vachris promised Costco would return the money to members.
“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. We will be transparent in how we plan to do this if and when we receive any refunds,” he shared.
Most companies will not be following Costco’s lead.
A survey from KPMG of 300 U.S.-based c-suite and business leaders at organizations across sectors with annual revenues above $1 billion shared with Fortune’s CFO Daily and CFO Dive found only 18% would fully reverse price hikes resulting from Trump’s tariffs.
Among the respondents, 34% would implement a partial rollback of price increases and 30% would use temporary promotional pricing, RetailWire reported.
Shutterstock
Analysts share impact on Costco’s tariffs
“Costco’s business is built on the principle that members pay a fee to access great value. As Costco mostly makes its profit from those fees, all actions are designed to protect renewals. That includes investing tariff refunds into lowering prices,” GlobalData Managing Director Neil Saunders shared on RetailWire.
He noted that keeping the money would not be in line with the company’s promise to members.
“Sure, Costco could keep the refund money as profit — just as it could charge more for its hotdog meal. It won’t because it doesn’t want to kill the membership goose that lays the golden eggs,” he added.
The warehouse club has different priorities than traditional retailers.
“The goal is not to maximize margin on each item or category, but to deliver the lowest possible cost structure to the member and earn the majority of profit through membership growth and renewal. In that context, returning tariff savings to shoppers reinforces the trust relationship that underpins the entire model. It sends a clear signal that Costco’s interests are aligned with the members’ wallets,” WhyteSpyder Vice President of Partnerships Scott Benedict shared on RetailWire.
Shep Hyken, RetailWire and bestselling New York Times author, offered further detail.
“This is why Costco has happy members. When you understand how they operate, it makes sense that they would find ways to channel tariff recoveries (or other ways to save money) back to their members. This is how they have retained and grown their membership,” he wrote.
Related: Costco issues urgent warning to shoppers
