The U.S. Court of International Trade ruled on August 13 that the president acted lawfully when he ended the de minimis exemption, the rule that let shipments worth $800 or less enter the country duty-free. A three-judge panel granted summary judgment to the government in Axle of Dearborn, Inc. v. Department of Commerce, the case brought in May 2025 by Detroit Axle, a Michigan auto parts distributor that had moved fulfillment to Mexico to keep using the exemption. Duty-free entry for low-value parcels is not coming back, and the ruling holds the current regime in place until the repeal Congress already passed takes effect in July 2027.
The Line the Court Drew
The decision is narrower than the headline suggests. On February 20 the Supreme Court held, 6-3, in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize a president to impose tariffs, and struck down the duties announced in April 2025. Detroit Axle argued that scrapping a duty exemption is the same act under another name, since the effect on an importer’s invoice is identical. The panel disagreed, writing that ending de minimis “does not reflect the wholesale power to impose tariffs at issue in Learning Resources.”
In the court’s reading, the president set no rate. He nullified a privilege that the statute lists among the actions available once an emergency is declared, which is a different thing from raising revenue. The panel also declined to rule for the government on the separate count challenging the tariffs themselves, noting that Detroit Axle had already recovered most of what it sought there. That distinction between voiding a privilege and levying a duty is the entire case, and it is the part most likely to be tested at the Federal Circuit.
Who Absorbs It
Most coverage will file this as a defeat for Shein and Temu. That reading is a year out of date. Both platforms rebuilt around U.S. warehousing after the exemption closed to Chinese and Hong Kong goods in May 2025 and worldwide on August 29 of the same year. A duty paid once on a bulk container is a fixed cost, spread across thousands of units, settled at head office and invisible at checkout. Slower delivery, not price, is what the model gave up.
The company with no such option is the independent label shipping direct from Porto, Copenhagen, or Seoul. It pays per parcel, adds a broker or a carrier handling fee to every order, and hands the customer an unfamiliar bill at the door. Since July 24 ordinary duties apply to postal shipments for the first time, after the flat 10 percent Section 122 surcharge that had covered them hit its 150-day statutory ceiling and lapsed. Apparel carries some of the steepest most-favored-nation rates in the schedule.
What replaced the surcharge is not lighter. The U.S. Trade Representative imposed duties of 10 to 12.5 percent on roughly 60 economies the same day, under Section 301 and tied to forced-labor enforcement. Goods of EU origin sit instead under the 15 percent ceiling agreed in last year’s trade deal. Whichever line applies, the arithmetic falls hardest on the cheapest order: a fixed per-parcel cost is a rounding error on a $2,000 coat and a margin event on a $95 dress.
Two Markets Moving the Same Way
The squeeze runs in both directions, and that is the part being reported as two separate stories. On July 1 the European Union abolished its own €150 duty relief and replaced it with a temporary €3 customs duty, in force until July 1, 2028, when the bloc’s Customs Data Hub is due to take over full tariff assessment. The European Commission counted about 4.6 billion low-value consignments arriving in 2024, roughly twice the previous year’s total.
The detail most reports miss is that the €3 applies per item and per tariff line, not per parcel. A package holding a scarf, a belt, and a pair of gloves attracts three separate charges. For an American label selling small accessories into Europe, that lands on precisely the orders that were already the thinnest, and it arrives in the same season as the U.S. change.
The scale of what is being reorganized is not in dispute. Customs and Border Protection processed 1.36 billion de minimis shipments in fiscal 2024, more than four million a day, and the agency says it collected over $1 billion in duties on some 246 million low-value parcels in the first months of the phaseout. Those are the agency’s own figures for a program it argued for ending.
Secondhand is inside the perimeter too. A buyer in Chicago taking a used coat from a seller in London now owes duty on the declared value like any other import; what survives are bona fide gifts under $100 and goods carried in by a traveler under $200. Detroit Axle told the court in April it had “only about a year left to recoup” its investment in Mexico. The Federal Circuit will decide whether the distinction between nullifying a privilege and imposing a tariff holds up on review, and the July 2027 statute may answer the question before the judges do.
