Quick Facts

• The U.S. Court of International Trade ruled August 13 that Trump legally ended the de minimis exemption using the International Emergency Economic Powers Act.
• De minimis shipments grew from 134 million in 2015 to more than 1.36 billion in 2024, with 76% originating from China before the May 2025 ban.
• Detroit Axle, the company that challenged the exemption’s removal, can appeal to the Federal Circuit Court.

The U.S. Court of International Trade ruled Thursday that President Trump had legal authority to rescind the de minimis tariff exemption for low-value imports, handing the administration a rare win in trade court.

The three-judge New York panel found that the International Emergency Economic Powers Act allowed the president to end a trade-related privilege, even if that same law does not authorize him to impose new tariffs outright. The distinction between removing an existing exemption and creating new tariff obligations proved central to the ruling.

Trump called it a “big win” on Truth Social, writing that the exemption had become “a giant loophole for tariff cheats” and a pipeline for fentanyl traffickers and counterfeiters.

What the Ruling Covers

Congress created the de minimis exemption in 1938 to spare the government the administrative cost of collecting duties on low-value shipments. The threshold was raised from $200 to $800 in 2016, one of the highest in the world.

Trump eliminated the exemption in two stages. An executive order effective May 2, 2025, ended duty-free treatment for shipments from China and Hong Kong. Those packages became subject to either the applicable tariff rate or a flat postal duty starting at $100 per item, rising to $200 later in 2025. A second executive order, effective August 29, 2025, extended the suspension to shipments from all other countries.

Before the May ban, U.S. Customs and Border Protection processed more than 4 million de minimis shipments per day. The total value of de minimis packages entering the U.S. in the prior year reached $64.8 billion.

The Legal Fight

Detroit Axle, an auto parts importer, sued the Trump administration in May 2025. The company had built a distribution center in Juarez, Mexico, to ship small orders of car parts directly to U.S. consumers under the de minimis threshold. After the exemption ended, the company faced tariffs exceeding 52% on its imports from China.

Detroit Axle’s legal team argued that Congress had kept the exemption alive until July 2027 in the 2025 omnibus spending bill, signaling that lawmakers wanted to give businesses time to adjust and never intended to grant the president power to eliminate it immediately. The Justice Department countered that lifting an existing exemption was not the same as imposing new tariffs.

The court sided with the administration. It ruled that IEEPA permitted the president to rescind a privilege tied to trade, separate from the question of whether that law allows the creation of new tariff obligations.

What This Means for Ecommerce

The ruling affects every retailer and brand that relied on sub-$800 shipments to avoid import duties. Chinese platforms Shein and Temu built their U.S. business models around the exemption, which helped fuel the volume surge from 134 million annual shipments in 2015 to more than 1.36 billion in 2024.

Commerce Secretary Howard Lutnick framed the exemption as a competitive threat to domestic sellers. “Foreign countries were sending in little packages for free and knocking out mom and pop businesses across America,” he said.

Detroit Axle can appeal Thursday’s decision to the Federal Circuit, keeping the legal question open. Trump’s broader tariff agenda has struggled in court. The Supreme Court ruled against most of his widest-ranging tariffs under IEEPA, and the Court of International Trade later struck down a replacement tariff. The de minimis ruling is a narrower but meaningful carve-out that stands for now.

Brands sourcing from China and shipping direct to U.S. consumers face a permanently changed cost structure unless a higher court reverses course.

Read more: Court Lets Trump Halt Tariff Exemption for Low-Cost Goods