US Trade Court Upholds Trump's Closure of De Minimis Tariff Exemption

The U.S. Court of International Trade has ruled in favor of President Donald Trump's decision to rescind the 'de minimis' tariff exemption, which had allowed imports valued under $800 to enter the country duty-free. The ruling, issued on Thursday, marks a rare legal victory for the administration in its use of emergency economic powers.

The court determined that the president possessed the authority under the International Emergency Economic Powers Act (IEEPA) to close the exemption for low-value shipments from China, Mexico, and Canada. This action was part of a broader set of executive orders in February 2025 that also introduced new tariffs on goods from those nations.

While the U.S. Supreme Court later struck down those specific tariffs, it did not address the separate decision to end the de minimis exemption. Congress has since passed legislation to permanently close the loophole, but that law does not take effect until July 2027.

The ruling came in response to a lawsuit filed by Michigan-based auto parts importer Detroit Axle. The company argued that IEEPA did not grant the president independent authority to eliminate the exemption before the congressional action took effect. Detroit Axle had adapted its business model around the exemption, establishing a distribution center in Juarez, Mexico, to consolidate replacement parts and ship small orders directly to U.S. consumers.

A three-judge panel sided with the government, finding that IEEPA allows the president to revoke a trade-related 'privilege' even if it does not permit the imposition of entirely new tariffs. President Trump celebrated the decision on social media, calling it a 'big win' and describing the exemption as a 'giant loophole for tariff cheats.'

The broader legal landscape for the administration's tariff policies remains contentious. The Supreme Court ruled against most of the wide-ranging tariffs in February, and the trade court has also rejected a subsequent temporary tariff. The administration has since shifted to a third legal justification for tariffs covering over 99% of imports, a move that is also facing legal challenges from states and small businesses.