US court backs Trump's power to end $800 de minimis exemption

The US Court of International Trade ruled Thursday that Trump had authority under the International Emergency Economic Powers Act to suspend the de minimis exemption for imports under $800, a rare judicial victory after the Supreme Court struck down his broader tariffs in February.

"For years, foreign shippers could send packages worth up to $800 into our country, duty free, no tariff, far less scrutiny," Trump posted on Truth Social after the ruling. "It became a giant loophole for tariff cheats."

A three-judge panel in New York found IEEPA lets the president rescind a trade-related "privilege" even though the law does not authorize entirely new tariffs, a distinction the court said does not "run afoul of separation of powers principles." US Customs and Border Protection collected more than $1 billion in duties from the suspension in 2025, the agency said last year.

The ruling keeps the exemption suspended until Congress's permanent repeal takes effect in July 2027, upending the business model of Chinese e-commerce sellers Temu and Shein that relied on duty-free small parcels to sell ultra-cheap goods to US shoppers.

The legal distinction that saved the exemption

The case turned on whether IEEPA — the same law the Supreme Court ruled in February could not be used to impose sweeping tariffs on trading partners — could still justify closing the exemption. The high court's Feb. 20 decision did not address the de minimis question, and the trade court said the two actions differ in kind: canceling an existing privilege is not the same as creating a new tariff obligation.

Detroit Axle, a Michigan-based auto parts importer that sued in May 2025, argued the president had no independent authority to close the exemption before Congress's own repeal took effect. The company had built its business around the loophole, opening a distribution center in Juarez, Mexico, to ship small orders directly to US consumers. The court rejected that argument, and Detroit Axle chief executive Mike Musheinesh said the company would "continue to focus on serving our customers, supporting our employees, and adapting to the changing trade environment."

Trump has said the exemption cost the US an estimated $10.8 billion in foregone tariff revenue in 2024, and framed the crackdown as a public safety matter, citing fentanyl traffickers and counterfeiters. The exemption, established in 1938 to avoid the cost of collecting duties on low-value shipments, exploded in use alongside the rise of cross-border e-commerce.

What happens next

The ruling largely determines whether Trump can keep the exemption suspended until the permanent repeal takes effect next July. The crackdown is also spreading globally: Europe is eliminating its own exemption for cheap imported packages, a shift that could reshape how Chinese retailers reach Western consumers.

Trump's broader tariff agenda has fared poorly in court. The Supreme Court ruled against most of his wide-ranging tariffs on Feb. 20, and the trade court later rejected a temporary tariff imposed to replace those duties. Trump has since moved to a third legal authority — forced-labor duties under Section 301 of the Trade Act of 1974 — to impose tariffs on more than 99 percent of imports, a policy now challenged by 25 US states and small businesses.

The de minimis ruling sets a new boundary for IEEPA's application, one that could influence the pending litigation over the Section 301 tariffs. For importers and cross-border sellers, the practical effect is immediate: the duty-free channel that carried billions of dollars in small parcels is closed, and the costs are being passed through to US consumers.

This article is for informational purposes only and does not constitute investment advice.