Court Upholds Trump Order Ending Tax-Free Import Loophole

The U.S. Court of International Trade upheld an executive order by Donald Trump that eliminated the de minimis exemption, which previously allowed imports valued under $800 to enter the United States tax-free. The ruling concludes a legal challenge initiated in May 2025 by Detroit Axle, a Michigan-based auto-parts distributor, which argued the president lacked the legal authority under the International Emergency Economic Powers Act to remove the exemption.

A three-judge panel determined that rescinding the loophole did not violate separation of powers principles. The court distinguished this action from previous global tariffs struck down by the Supreme Court, noting that this specific order did not constitute an exercise of the power to legislate or the power of the purse.

Trump characterized the ruling as a victory against tariff cheats and criminals. While the closure of the loophole primarily impacts e-commerce companies such as Shein and Temu, economists warn the change may disproportionately affect lower-income American consumers.