A lawsuit looking to revive the currently-suspended de minimis exemption has the green light to move forward after a U.S. Supreme Court ruling struck down many of President Donald Trump's tariffs.
Last week, the U.S. Court of International Trade granted the plaintiff's motion to lift the stay in Axle of Dearborn, Inc. v. Department of Commerce. The court implemented a stay on the case last year until V.O.S. Selections, Inc. v. Trump — one of the consolidated suits the Supreme Court ruled on in rejecting a wide swath of Trump's tariffs — was resolved.
Auto parts retailer and distributor Axle of Dearborn, which does business as Detroit Axle, argued in an amended complaint filed March 5 that the executive branch has no power to nullify the de minimis exemption. The provision enabled imports of less than $800 to enter the U.S. duty and tax free prior to its removal in August via executive order.
The elimination stung Detroit Axle, which said it contracts with China-based manufacturers that can make auto parts at a lower cost than domestic producers. The company has historically relied on the de minimis exemption to maintain low prices when delivering those auto parts to customers. Due to the elimination of de minimis, Detroit Axle said it is now subject to a 52.5% tariff on its China-based auto parts imports.
"Detroit Axle’s frugal buyers will not bear an increase in prices to match the tariffs, so the company must take massive hits to its bottom line when it sells its imported products," per the filing. "Detroit Axle has exhausted its stockpile of pre-tariff inventory and is experiencing severe damage to its profitability as a result of the tariffs."
Detroit Axle said the International Emergency Economic Powers Act, the 1977 law which was the focus of the Supreme Court’s recent ruling, did not give Trump the authority to eliminate the de minimis exemption.
"If IEEPA granted the President the power to unilaterally rescind statutory tariff exemptions, it would be an unconstitutional delegation of Congress’s legislative power," Detroit Axle said.
The Court of International Trade should declare executive orders that rolled back or eliminated the exemption unlawful and order the government to refund all tariffs collected as a result of the de minimis elimination, Detroit Axle said. The company acknowledged that the de minimis exemption would still be on the chopping block under legislation signed last year, but noted that the July 2027 implementation date for the move would give companies "adequate time to adjust their operations."
The Court of International Trade ordered the defendants to file a response by March 26 and for the plaintiff to file a reply no later than April 9.
