A federal trade court has upheld President Donald Trump's repeal of the "de minimis" exemption, which had let goods worth under $800 enter the US tax-free. The US Court of International Trade ruled the move falls within Trump's authority under the same law the Supreme Court used to strike down his broader "liberation day" tariffs.
A three-judge panel on the US Court of International Trade upheld Trump's elimination of the "de minimis" exemption on Thursday, rejecting a legal challenge from a Michigan-based auto-parts distributor. The exemption had allowed goods valued under $800 to enter the United States without import tax.
Trump signed an executive order rescinding the exemption, and Detroit Axle sued the administration in May 2025, more than three months later. The company argued Trump lacked legal authority to scrap the loophole under the International Emergency Economic Powers Act, or IEEPA.
Court draws a line under IEEPA power
Trump had invoked the same statute last year to impose sweeping "liberation day" tariffs on nearly every country in the world. In February, the Supreme Court struck those tariffs down, ruling that IEEPA did not authorize them and that Trump needed congressional approval.
But the trade court panel drew a distinction this time. According to CNBC, it found that scrapping the de minimis exemption, unlike the global tariffs, "is not an exercise of the power of the purse" and does not encroach on Congress's legislative authority.
Loophole was a fixture of low-cost e-commerce
The de minimis exemption was heavily used in retail, particularly by e-commerce companies such as Shein and Temu that ship large volumes of low-price clothing and other goods. Some businesses shipped packages individually from Chinese manufacturers to US consumers, while larger firms routed shipments through warehouses in Canada and Mexico to avoid tariffs regardless of where goods were made.
Economists have warned that ending the exemption could disproportionately affect lower-income and minority consumers who rely on inexpensive online goods. Trump, who has long promoted tariffs as a tool of protectionism, welcomed the ruling in a Truth Social post Thursday, saying the loophole had cost the US billions of dollars in uncollected import-tax revenue.
Source: CNBC
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