American retail behemoth Costco has taken the United States government to court, demanding a full refund for tariffs paid on imported goods. The lawsuit escalates a significant battle between major corporations and the U.S. over trade policies that have rattled global supply chains.

While the legal showdown unfolds thousands of kilometres away in the U.S. Court of International Trade, its verdict could have ripple effects felt right here in Kenya. The case challenges the legality of broad tariffs, and its outcome could influence the price of imported electronics, apparel, and other consumer goods on the shelves of Nairobi supermarkets.

Costco's suit argues that the Trump-era tariffs, primarily targeting Chinese goods, were imposed unlawfully. The company contends the president overstepped his authority by using emergency powers to levy taxes—a power the U.S. Constitution reserves for Congress. This legal challenge is not isolated; Costco is the largest of thousands of American companies, including major brands like Revlon, Ford, and Tesla, that have filed similar lawsuits.

A High-Stakes Legal Battle

The core of the dispute lies in the use of the International Emergency Economic Powers Act (IEEPA) of 1977 to justify the tariffs. Lower courts have previously ruled that this law, historically used for sanctions, does not authorize the president to impose sweeping tariffs. However, these duties remain in force pending a final decision from the U.S. Supreme Court.

The financial stakes are immense. According to U.S. federal data, tariff collections surged from $118 billion in fiscal year 2024 to $195 billion in fiscal year 2025 (approx. KES 15.2 trillion to KES 25.1 trillion). A ruling against the government could open the floodgates to an unprecedented volume of refund claims.

Key points in the corporate legal challenge include:

• Unlawful Authority: Companies argue the president cannot unilaterally create or raise tariffs without congressional approval.
• Massive Pushback: Approximately 3,500 U.S. companies have sued the administration over the tariffs on goods from China.
• Precedent: Lower courts have already deemed the use of IEEPA for these tariffs as illegal, bolstering the companies' case.

Why It Matters for Kenya

For Kenya, the case highlights the volatility of global trade. Our economy's significant reliance on imports, particularly from China, makes it susceptible to international trade disputes. If a major economic power's protectionist policies are successfully challenged, it could strengthen the framework for global free trade.

Conversely, prolonged trade wars can lead to increased costs for Chinese manufacturers, which are often passed down to Kenyan consumers, making everyday goods more expensive. An unstable global market also strengthens the U.S. dollar as a 'safe haven' currency, which can weaken the Kenyan Shilling and further increase the cost of imports.

The final ruling from the U.S. Supreme Court is anticipated by mid-2026. Until then, Kenyan businesses and consumers are left watching a legal drama that, while distant, could ultimately hit close to home. The verdict will not just echo in American courtrooms but could subtly reshape the price tags in Kenyan marketplaces.