Why Costco’s CEO Sounds Optimistic About Dealing With Tariffs
Written by
John Schmoll
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Retailers and consumers alike have nervously watched as President Trump introduced sweeping tariffs upon his return to office. While some tariffs are on a temporary pause, such as the recent 90-day pause on goods imported from China, there’s no telling how things will play out.
Read More: 6
Costco is taking a different approach to managing the impact of tariffs on sourcing products for its stores. Here’s why CEO Ron Vachris isn’t bearish on how increased duties will harm the retailer.
Costco Believes It Can Still Find Deals
Part of what drives the popularity of Costco is its attention to providing attractive pricing to its members. The retailer can do this, in part, thanks to its willing base of customers who pay membership fees to access exclusive deals the company negotiates.
During Costco’s recent earnings call, Vachris communicated positivity that the retailer will still be able to negotiate deals. “With our flexibility of the treasure hunt, there’s not many items that we can’t find something to replace or something else to bring in,” said Vachris.
This echoes previous sentiments expressed by Costco CFO Gary Millerchip, who indicated in December 2024 that the retailer would replace tariff-hit products with more affordable alternatives. Taken together, it’s clear Costco has been actively monitoring tariffs and is confident it can adjust course to locate economical products for its members.
Sales Aren’t Dependent on Foreign Goods
Retailers that heavily depend on foreign imports are typically more concerned with tariffs. Those goods are imported to the U.S., with companies passing the increased cost onto Americans. Apple is one example, as 80% of Apple’s production takes place in China.
Costco doesn’t face such an exposure, allowing it to weather a potential storm with more ease. “About one-third of our sales in the U.S. are imported from other countries, and less than half of those are items coming from China, Mexico, and Canada,” noted Vachris during Costco’s earnings call. The reduced reliance on foreign sales allows the warehouse giant to act with more agility, not found at companies with heavy reliance on foreign goods.
Costco Has Power
Costco has significant power in the retail landscape. The company had roughly $250 billion in sales in fiscal year 2024. This gives the big box store the muscle to negotiate better deals for its members. Costco is already using this weight to require price cuts from its suppliers in China.
Vachris is confident Costco can apply similar pressure on other suppliers. “We have great partnerships with our suppliers, and those items are very important to them as well. So I feel like we are well equipped to deal with whatever is coming in our direction and not knowing what that’s going to be. I can’t really tell you what the outcome will be, but our people are nimble and they’re ready to go at it if they need to,” said Vachris. Suppliers want access to Costco’s member base. Given the retailer’s pull, it can demand deals other retailers might not be able to secure.
Tariffs have rattled the confidence of Americans and businesses alike. Vachris has measured confidence that Costco can effectively blunt any impact from tariffs.
More From GOBankingRates
Sources:
New York Times, “U.S. and China Agree to Temporarily Slash Tariffs in Bid to Defuse Trade War
Nasdaq, “Costco (NASDAQ:COST): Why Its Unique Business Model Is Worth the Cost“
Yahoo Finance, “Costco follows Walmart’s lead on tariffs“
CNBC, “Here’s where Apple makes its products — and how Trump’s tariffs could have an impact“
Yahoo Finance, “Q2 2025 Costco Wholesale Corp Earnings Call“
Costco, ‘Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2024 Operating Results“
