RESOLVING THE LEDGER
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A federal trade court on Thursday upheld President Donald Trump 's elimination of the "de minimis" exemption , which allowed goods valued under $800 to be imported to the U.S. tax free.
Trump, a major proponent of tariffs and other forms of protectionism, celebrated the continued closure of the loophole, which he claims has cost the U.S. billions of dollars in uncollected import-tax revenue.
Attorneys for the plaintiff, a Michigan-based auto-parts distributor, did not immediately respond to CNBC's request for comment on the ruling.
The company, Detroit Axle, had sued the Trump administration in May 2025, more than three months after Trump signed an executive order rescinding the de minimis exemption.
The plaintiff argued that Trump lacked the legal authority to scrap the loophole under the International Emergency Economic Powers Act, or IEEPA.
Trump had used the same law to try to impose sweeping "liberation day" tariffs on nearly every country in the world last year. In February, the Supreme Court struck those duties down on the grounds that IEEPA did not authorize them.
But in Thursday's ruling, a three-judge panel on the U.S. Court of International Trade found that the statute does allow Trump to scrap the de minimis exemption.
"In reaching this conclusion, we find that the President's power to 'nullify [or] void . . . exercising any . . . privilege' does not run afoul of separation of powers principles," they wrote in the order, quoting the law.
They concluded that, unlike in key cases challenging Trump's global tariffs, the rescission of the duty-free loophole "is not an exercise of the power of the purse" and "is not an exercise of the power to legislate." In striking down his global duties, the Supreme Court said Trump needed congressional approval.
The de minimis exemption was heavily exploited in the retail industry, especially by e-commerce giants like Shein and Temu that sell large quantities of low-price clothes and other goods.
To take advantage of the exemption, some companies shipped individual packages directly from Chinese manufacturers to American consumers. Larger companies set up warehouses in Canada and Mexico and then sent individual shipments over the border one by one, allowing them to avoid costly tariffs, regardless of where the goods were manufactured.
Economists have warned that ending the exemption could disproportionately impact lower-income and minority American consumers who buy inexpensive goods online.
But Trump, in a Truth Social post Thursday afternoon, called the trade court's ruling a "BIG WIN" on "one of the most DESPICABLE loopholes in American Trade Policy."
De minimis "became a giant loophole for TARIFF Cheats" and was exploited by criminals shipping drugs and other illegal products into the U.S., Trump wrote.
"With the stroke of my mighty pen — NO AUTOPEN!!! — we ended this ridiculous giveaway, and made Foreign Goods play by the rules," Trump boasted. "The Importers sued. Today, THEY LOST."
— CNBC's Gabrielle Fonrouge contributed to this report.
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