Trade Court Upholds De Minimis Repeal on the Strength of One Word

A three-judge panel of the US Court of International Trade held on Aug. 13 that the International Emergency Economic Powers Act authorises the President's rescission of the de minimis exemption, the provision that admitted imports valued at $800 or less free of duty.

The plaintiff, Axle of Dearborn — trading as Detroit Axle — is a family-run auto parts distributor that built its business around the exemption. It lost on the two counts it moved on.

It did not lose the case. The panel also denied the Government's cross-motion for summary judgment on Count III and deferred judgment on it. That count concerns IEEPA tariffs generally, where the Supreme Court has already ruled against the Government. The matter remains open.

The word that decided it

IEEPA lets the President "nullify, void, prevent or prohibit … exercising any right, power, or privilege" with respect to property in which a foreign country or national has an interest.

The de minimis statute, 19 U.S.C. § 1321, describes duty-free treatment as the privilege of that subdivision, and refers again to any person entering an article using the privilege of the section. Congress used the word twice. When it enacted the One Big Beautiful Bill Act, the Budget Committee used it again, in a section headed "Modifications to De Minimis Entry Privilege."

That is the whole ratio. The panel matched a statutory label against a statutory verb.

The court was explicit about the limits of that reasoning, and this is the part worth reading closely. Because the holding turns on Congress having designated de minimis a privilege, it carries no implication for tariff statutes Congress has not so designated. The panel named Section 122's 15% ceiling and 150-day limit specifically: those, it said, are restrictions on the President's authority, not privileges granted to importers.

Axle had argued that if IEEPA reaches de minimis, no trade statute is safe from the President's statutory eraser. The court's answer is that the eraser only works on things Congress labelled a privilege.

Why this is not Learning Resources

In February the Supreme Court held in Learning Resources v. Trump that IEEPA does not authorise the President to impose tariffs. Axle argued that removing an exemption is functionally identical to imposing a duty on previously exempt goods.

The panel rejected that. Suspending de minimis imposes no new duty — it renders sub-$800 goods subject to the same duties they would carry at any higher value, rates Congress itself set. What was struck down in Learning Resources was the power of the purse and the ability to rewrite the tariff schedule at will. Neither is engaged here.

For the separation of powers question the court reached back to Field v. Clark (1892), which upheld a statute directing the President to suspend duty exemptions on findings of unequal treatment. Suspending an exemption Congress created, on a condition Congress specified, is executing the law rather than making it.

The court also used Axle's own structure against it. Axle opened a distribution centre in Juárez, repackaging Chinese auto parts into sub-$800 consignments addressed to individual US customers. Having organised its operations expressly to use the exemption, the panel reasoned, Axle could hardly argue the exemption was not a privilege being exercised.

The APA door is shut

The second holding is procedural and has wider reach than the first.

Axle argued the agency actions implementing the executive orders were arbitrary and capricious. The panel held that where an agency exercises no discretion — where it is simply carrying out a lawful presidential directive — its actions are ministerial and not reviewable under the Administrative Procedure Act at all, following Franklin v. Massachusetts.

An agency compelled by executive order cannot act arbitrarily, because it has no discretion to exercise. Commerce, Treasury and CBP could not have refused.

Practically: there is no route through the implementing agency. A challenge has to go at the President's authority directly.

What it means for forwarders

Footnote 12 is the operative paragraph. It records that this court has separately ordered CBP to liquidate unliquidated entries without regard to IEEPA duties, to reliquidate entries where liquidation is not final, and — notably — to reliquidate entries where liquidation is final, all without regard to those duties. The Government has appealed and four identical orders have been consolidated at the Federal Circuit. Any client who paid IEEPA duties has a live refund question sitting in that appeal, and it is a question for their customs counsel now rather than after it resolves.

De minimis is not coming back, and it never was for long. The OBBB repeals it by statute on July 1, 2027. Even a complete win for Axle would have restored the exemption for roughly ten months. Any business model still assuming its return has no path.

Audit your programmes for the word "privilege." The holding is narrow by design — it reaches only benefits Congress explicitly designated as privileges. But that is now a live category, and it is worth knowing whether any duty-relief programme you rely on carries that word in its enabling statute. This is a question to put to counsel, not a conclusion to draw from a news report.

The emergency declarations went untested. A footnote records that the parties did not dispute whether the declared emergencies were valid or whether suspending de minimis addressed them, so the court did not consider it. That argument is unmade rather than lost.

This is a report on a court opinion, not legal advice. Nothing here substitutes for your own customs counsel.