Court Declines US Tariff Relief on Low-Cost Goods, for Now
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A U.S. trade court has for now denied an effort to restore a tariff exemption for small-value packages from China that President Donald Trump ended earlier this year.
The decision from the Court of International Trade on July 28 in the fight over what’s known as the “de minimis” tariff exemption is the latest favorable order for the Trump administration in its defense against multiple lawsuits over his move to raise global tariffs.
The three-judge panel said it wouldn’t act in a case brought by a U.S.-based auto parts distributor while a set of separate legal challenges to Trump’s tariff actions are pending before a federal appeals court. Those combined lawsuits, brought by other businesses and a group of state attorneys general, also deal with the administration’s decision to end the de minimis exception for Chinese imports.
The president’s contested policies remain in effect for now. The U.S. Court of Appeals for the Federal Circuit is set to hear arguments at the end of this month in the earlier cases challenging the broader sweep of his executive orders.
In the July 28 order, the three-judge panel wrote that it “will not grant redundant, contingent relief” while the other fight works its way through the U.S. legal system.
Detroit Axle claimed that Trump went beyond his authority when he relied on an economic emergency powers law to unilaterally get rid of a tariff exception that Congress put in place. (Detroit Axle via X)
Packages coming into the U.S. have qualified for the exemption if they have a retail value of $800 or less. Trump’s move to end it for China and Hong Kong hurt discount Chinese marketplaces such as Temu and Shein Group Ltd. that ship low-cost clothing, household goods and other items directly to U.S. consumers. The administration has accused Chinese chemical companies of abusing the policy to ship illegal synthetic opioids to the U.S.
Small businesses in the U.S. have also said they’re feeling the pinch. The latest case before the trade court was brought by auto parts distributor Detroit Axle, which argued that it should be able to separately pursue its case because it raised different legal arguments than the other lawsuits over Trump’s tariffs. The company said it would be forced to fire hundreds of workers and potentially shut down without a court ruling soon.
Detroit Axle claimed that Trump went beyond his authority when he relied on an economic emergency powers law to unilaterally get rid of a tariff exception that Congress put in place. Alternatively, the company argued that the executive order violates the Administrative Procedure Act, which requires notice and an opportunity to object to federal agency actions.
The tax-and-spending bill passed by the Republican-majority Congress that Trump signed earlier this month gets rid of the de minimis exemption for commercial imports from all countries. Detroit Axle’s lawyer said during arguments before the trade court on July 10 that the legislative change doesn’t take effect until 2027, however, offering businesses like his client a more reasonable window to prepare.
The Justice Department defended Trump’s use of the economic emergency law as a necessary and legitimate effort to stop the flow of deadly drugs into the country.
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The trade court originally struck down Trump’s tariff executive orders in their entirety, including the part that ended the exception for goods from China and Hong Kong. The Federal Circuit paused the lower court’s decision and said the policies could remain in effect until the higher court rules. If the Federal Circuit sides with the businesses and states that sued, reinstating the lower court block, that would mean the exemption goes back into effect as well.
The Federal Circuit will hear the case July 31.
The case is Axle of Dearborn Inc. d/b/a Detroit Axle v. Department of Commerce, 25-cv-91, Court of International Trade.
