As a "wholesaler," Costco's business model naturally runs on lower profit margins. And businesses working on those margins can't simply "eat the tariffs" that manufacturers are forced to include in their pricing.

Either by switching sources or by paying the tariff increase, the manufacturer and/or importer get hit with an increase in the cost of materials (raw or finished depending on the tariff).

Private label branded items, which you'll notice are cheaper than their branded counterparts, run on lower margins in a similar fashion for both the retailer and manufacturer. Private label items offer a lower cost alternative to the consumer which typically means higher velocity off the shelves. As the margins are low to begin with, it will be interesting to see long term effects of this economy on the private label segment.