CEO Ron Vachris opened his address to investors on Costco’s fiscal Q2 earnings call by discussing tariff changes and potential refunds.
“The future impact of tariffs remains extremely fluid as the recently eliminated IEEPA tariffs have now been replaced with new global tariffs for at least the next 150 days,” he said. “Our buyers continue to act with great agility and urgency, always with the goal of reducing the impact of tariff on prices for our members.”
The IEEPA refers to the International Emergency Economic Powers Act. IEEPA tariff refunds are the return of billions of dollars that U.S. companies paid in import duties as a result of the Trump administration’s tariff announcements in 2025.
The Supreme Court ruled in February 2026 that such tariffs were unlawful. Then, in March 2026, the Court of International Trade ordered Customs and Border Protection to begin refunding the duties companies paid as a result of those tariffs.
Recently, retailers have discussed the state of U.S. tariffs on imported goods as they plan ahead in 2026, including Best Buy, e.l.f. Beauty and Under Armour.
In its fiscal Q2, Costco lowered prices on what Vachris called “key items.” Those included eggs, cheese, coffee and some paper products as the retailer saw lower inflation on those commodities, he said.
“We will continue to be a pricing authority and as some tariffs have been reduced, we are lowering prices on affected items such as certain textiles, bedding and cookware SKUs,” Vachris said.
Costco is No. 7 in the Top 2000 Database. The database is Digital Commerce 360’s ranking of the largest online retailers in North America by their annual ecommerce sales. It’s also the fourth-largest Mass Merchant in the database.
Costco’s approach to tariff changes
Costco always wants to be the first to lower prices and the last to raise them, Vachris said.
Vachris said Costco is relying on its buying expertise and limited SKU count model to manage the shifting tariffs scenario “as well as anyone.”
He pointed to Costco’s private-label Kirkland Signature products as an area where these efforts have been effective.
“Our strategies include moving the country of production when that makes sense, consolidating buying efforts globally to lower the cost of goods, leaning in on Kirkland Signature, where we have the most control of the supply chain and sourcing more items domestically,” he stated.
Those are also actions Costco has taken throughout the past year to minimize tariffs’ impacts. And in many cases, Costco did not pass the full cost of tariffs onto members, according to Vachris.
“The complexity of the tariffs implemented over the past year, including layering of different tariffs on top of each other and multiple changes in rates throughout the year, also made it challenging to track the exact impact to an individual item sold,” he said.
Regarding IEEPA tariff refunds, Vachris said “it is not yet clear what the process will be, what refunds, if any, will be received and when this will happen.”
“As we’ve 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’ll be transparent in how we plan to do this, if and when we receive any refunds.”
Chief financial officer Gary Millerchip said Costco buyers “continue to find new and exciting items,” which has led to positive sales results each month “when you strip out the noise around calendar shifts and strip out the noise around sort of short-term blips when there’s questions around port strikes and tariffs.”
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