With the Trump administration’s heavy hitting tariffs rendered defunct by the Supreme Court, a lawsuit challenging the suspension of the de minimis exemption has been given the green light to proceed.
Last week, the New York-based Court of International Trade (CIT) lifted a stay on Axle of Dearborn Inc. v. the Department of Commerce, a complaint from an auto parts distributor challenging the federal government’s authority to nix de minimis, which for years allowed shipments worth $800 or less to enter the country duty free.
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The CIT implemented the stay on the suit until the VOS Selections v. Trump case challenging the administration’s International Emergency Economic Powers Act (IEEPA) tariffs was resolved. That case was ultimately consolidated with the Learning Resources v. Trump case that was heard by the Supreme Court in November.
The de minimis exemption, referred to as a “loophole” in trade law by some because it allows small shipments to bypass the stringent customs inspections and processing as well as the payment of import taxes, was also initially terminated by the president under executive orders citing the IEEPA statute last spring. According to the newly re-filed complaint, doing away with de minimis in such a manner “exceeds the President’s statutory authority.”
“Congress established an $800 floor for the de minimis exemption by statute, and that statute does not allow the President or any other executive official to suspend or eliminate the exemption by administrative fiat,” the complaint read. Only the Treasury Secretary can alter the $800 threshold through notice-and-comment rulemaking—if it is alterable at all.
What’s more, IEEPA doesn’t expressly imbue the president with the authority to modify the de minimis exemption, much like it didn’t give him the power to establish tariffs on more than 90 of America’s trading partners, the complaint continued.
Detroit Axle, which imports car parts from China for sale in the U.S., argued in the filing that the impact of the kibosh on de minimis was “swift and significant,” with the company now paying tariffs worth more than 52 percent on its imports.
“Detroit Axle’s frugal buyers will not bear an increase in prices to match the tariffs, so the company must take massive hits to its bottom line when it sells its imported products, the company said, adding that it “ exhausted its stockpile of pre-tariff inventory and is experiencing severe damage to its profitability as a result of the tariffs.” Because the company was forced to raise prices, it has seen a marked decrease in sales to shoppers who can no longer afford to buy its products.
The firm is now asking the CIT to declare that executive orders rolling back the de minimis exemption are unlawful. It is also seeking refunds of the tariff payments it has made since the de minimis exemption was terminated through the executive orders.
The suit’s potential success won’t guarantee the reinstatement of de minimis, however. A provision sunsetting the provision was included in the “One Big Beautiful Bill Act” pushed through Congress by Republicans last June. Detroit Axle argued in its CIT filing that while Congress opted to end de minimis, “it chose to keep the exemption in place until July 2027, giving businesses adequate time to adjust their operations.”
“Congress did not ratify the President’s decision to end the de minimis exemption immediately, nor did it expand the President’s authority to alter the exemption on his own initiative,” the filing said.
Some proponents of de minimis are also attempting to revive elements of the provision through legislative means.
A February Congressional proposal aims to provide a new channel for low-value shipments to enter the United States duty free. Congresswoman Carol Miller (R-W.V.) and Congressman Don Beyer (D-Va.) authored the Secure Revenue Clearance Channel Act, with the goal of addressing a “growing backlog” of imports at America’s ports of entry by facilitating streamlined cooperation between express carriers and U.S. Customs and Border Protection (CBP). The bill would allow shipments valued at $600 or less to move more quickly through the importation and customs process.
