Despite growing concerns over potential tariff hikes, Costco remains unfazed—at least when it comes to its shoppers’ wallets. The retail giant recently reported that its members haven’t changed their spending habits, even as economic uncertainty looms. With inflation and trade tensions making headlines, Costco’s improving sales suggest that customer loyalty and bulk-buying value may be powerful enough to weather the storm.
Costco Customers Stay the Course Despite Tariff Concerns
President Donald Trump’s renewed tariff threats have intensified economic uncertainty, and consumers generally understand that tariffs aren’t absorbed by foreign governments but instead result in higher prices for goods. One might expect that large retail chains would express concern over these developments—and many do—but Costco’s Chief Financial Officer, Gary Millerchip, offers a different perspective. His remarks suggest either a strong level of trust in the Costco brand or a greater sense of consumer confidence in the economy than many might assume.
Despite financial worries elsewhere, Costco members continue to shop as usual.
“We’re not really seeing any change in what we’ve seen around our members over the last really few quarters,” Millerchip said during Costco’s second-quarter earnings call.
However, price increases are still on the horizon, prompting many Americans to become more cautious with their spending.
According to Millerchip, although customers continue to shop at the same rate, they are evaluating their purchases more carefully than before.
“We believe that the member is probably as much focused now on quality, value and newness as they have been for quite some time. But they are still showing that willingness to spend, but they’re being very choiceful where they’re spending their dollars,” he added.
Looking ahead, Millerchip anticipates that shoppers will become even more selective, especially as the potential impact of tariffs and inflation continues to unfold.
“And we think that’s likely to continue and maybe even become more choiceful as the impact of some return of inflation and the potential impact of tariffs could flow through as well. I’d say we’re also seeing a continued sign of what I mentioned last quarter, where there’s some indication that members are spending a little bit more on food at home versus food away from home overall,” he said.
How Costco Benefits from Tariff Threats—and Still Manages to Keep Prices Low
As tariff threats heighten economic concerns and the potential for rising consumer prices, Costco may actually be in a position to gain. The uncertainty surrounding trade policy could drive more shoppers to its warehouse clubs, known for low prices and bulk savings, while also encouraging membership renewals. Essential offerings like discounted gas and groceries continue to attract steady foot traffic, even as consumers become more cautious with spending.
Compared to many other retailers, Costco holds a stronger negotiating position with suppliers, thanks to its massive scale. That leverage helps the company keep costs—and ultimately, prices—down.
During the company’s earnings call, CEO Ron Vachris explained how Costco has proactively worked to offset tariff costs without passing them on to shoppers. He noted that Costco’s buyers moved quickly to rush shipments into the U.S. ahead of tariff deadlines. The company also rerouted certain goods from countries facing higher tariffs to non-U.S. markets and increased sourcing for its private-label Kirkland Signature products from the same countries or regions where those goods are sold.
Even with tariffs in play, Vachris emphasized that Costco has managed to lower prices on key items like eggs, butter, and olive oil.
In some instances, the company absorbed the extra costs caused by tariffs, while in others, it adjusted prices accordingly, Millerchip explained. For example, Costco chose to maintain the prices of pineapples and bananas from Central and South America, recognizing them as everyday staples.
“We felt it was important to really eliminate the impact there for the member by working with our suppliers and by us finding efficiencies and accepting that there may be a margin impact,” he said.
Costco Reports Strong Quarterly Performance Amid Economic Challenges
Costco reported strong financial results for the fiscal third quarter of 2025, reflecting its resilience amid economic uncertainties and tariff pressures. Here are the highlights from Fiscal Q3 2025:
- Revenue: $63.21 billion, an 8% increase year-over-year, slightly surpassing analyst expectations.
- Net Income: $1.9 billion, or $4.28 per diluted share, up from $1.68 billion ($3.78 per share) in the same period last year.
- Comparable Store Sales: Increased by 5.7% globally, with U.S. sales up 6.6%, Canada 2.9%, and other international markets 3.2%.
- E-commerce Sales: Grew by 15% year-over-year, indicating robust online demand.
- Membership Fee Revenue: Rose to $1.24 billion, reflecting strong member retention and new sign-ups.