Tariffs on de minimis packages won’t stop yet, says Court

Federal Trade Court Upholds Trump’s Tariffs on De Minimis Shipments, For Now

Washington, D.C. – July 29, 2025 – A federal trade court has declined to issue a preliminary injunction to block President Donald Trump’s executive order ending the de minimis tariff exemption for low-value packages shipped to the United States, according to a ruling issued on Monday by the U.S. Court of International Trade. The decision means that tariffs on shipments valued under $800, primarily from China and Hong Kong, will remain in effect pending the outcome of a broader legal challenge.

The lawsuit, filed by auto parts retailer Detroit Axle in mid-May, argued that Trump’s April 3 executive order, which eliminated the duty-free status for de minimis shipments effective May 2, 2025, was unlawful and posed an “existential threat” to its business. The de minimis exemption, part of the Tariff Act of 1930, previously allowed packages valued at $800 or less to enter the U.S. without tariffs or extensive customs inspections, benefiting e-commerce giants like Shein and Temu. Detroit Axle claimed the sudden imposition of tariffs, which reached 72.5% for Chinese imports, disrupted its supply chain and made importing auto parts from China cost-prohibitive, forcing the closure of its distribution facility in Juarez, Mexico.

A three-judge panel on the U.S. Court of International Trade ruled that Detroit Axle’s claims are covered by another ongoing case, V.O.S. Selections v. Trump, which challenges the broader scope of Trump’s “reciprocal” tariff authority. The court stayed Detroit Axle’s case and denied its request for an injunction, citing the overlap with the V.O.S. case, where a panel previously struck down Trump’s reciprocal tariffs in late May. Oral arguments in the V.O.S. appeal are scheduled for Thursday before a federal appeals court, which could determine the fate of these tariffs.

The de minimis exemption, raised to $800 in 2016, has facilitated a surge in low-cost imports, with U.S. Customs and Border Protection (CBP) processing nearly 4 million such shipments daily, over 60% of which originate from China. Trump’s executive order, aimed at curbing deceptive shipping practices and the influx of illicit substances like synthetic opioids, imposes a 120% tariff or a $100 flat fee (rising to $200 in June) on these packages. The policy has sparked significant backlash from retailers and consumers, who face higher prices and potential shipping delays due to increased CBP processing requirements.

Retailers like Shein and Temu have already raised prices in response, with some items doubling in cost since April 25, according to industry reports. The National Bureau of Economic Research estimates that the tariffs could cost U.S. consumers $10.9 billion to $13 billion annually, disproportionately affecting lower-income households reliant on affordable imports. Critics, including trade expert Clark Packard, argue that the added administrative burden may hinder CBP’s ability to screen for illegal drugs, despite the policy’s intent.

The White House defends the tariffs as a necessary measure to protect U.S. manufacturers and address the opioid crisis, citing deceptive practices by Chinese shippers. However, China’s commerce ministry has warned that the tariffs will raise costs for American consumers, and industry groups have accused the U.S. of “hegemonic actions.” A temporary reprieve came on May 13, when the tariff on postal shipments was reduced to 54% from 120%, offering some relief to e-commerce platforms, though many goods still face higher duties under existing trade actions.

The V.O.S. case’s outcome could reshape U.S. trade policy, with implications for global e-commerce and small businesses. For now, the court’s decision keeps the tariffs in place, leaving companies like Detroit Axle and consumers bracing for higher costs and logistical challenges.

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