Detroit Axle, a family-run provider of auto parts based in Michigan, has filed a lawsuit challenging President Donald Trump’s elimination of the de minimis exemption for imported products coming from China and Hong Kong.

The president’s nixing of the importing exemption has had a “catastrophic” effect on Detroit Axle’s business and represents an existential threat to the company, as it has driven up costs to a point that’s become unsustainable, the lawsuit asserts. “By the end of June, the company will exhaust its existing inventory and will be forced to close the doors of its Michigan facilities and lay off hundreds of employees,” according to the suit.

Legally, the complaint asserts, the Trump administration lacks the statutory authority to end the de minimis exemption for China and Hong Kong. The exemption had allowed products that have a retail value of $800 or less and are imported by one person in one day to enter the United States tariff-free.

“Congress established an $800 floor for the de minimis exemption by statute, and that statute does not allow the President or any other executive official to suspend or eliminate the exemption by administrative fiat,” the lawsuit maintains. “Rather, if the $800 floor is alterable at all, it may be changed only through notice-and-comment rulemaking by the Secretary of the Treasury, which has not occurred here.”

The suit says kiboshing the de minimis exemption for products originating from China and Hong Kong is also an arbitrary and capricious violation of the Administrative Procedure Act (APA). Attorneys note that the exemption has been in place for nearly a century and that business models of some U.S. companies have become reliant on it.

“In reversing course and overriding the de minimis exemption,” the suit says, “the government violated bedrock APA principles by failing to consider these significant reliance interests, failing to consider other important aspects of the problem, and offering no reasoned explanation for its actions.”

The Trump administration has cited the International Emergency Economic Powers Act (IEEPA) as a legal foundation upon which the president can eliminate the de minimis exemption and implement import tariffs on nations around the globe, which he has done so far in 2025.

The Detroit Axle lawsuit disputes that, saying Trump or any president lacks the legal power under IEEPA to levy tariffs – an authority reserved for Congress.

“Any reading of IEEPA that would grant the President the power he claims – power to levy any tariffs he wants, on any country, for any period of time – would be an unconstitutional delegation of Congress’s tariff power,” the lawsuit adds.

Defendants named in the suit include the U.S. Department of Commerce, U.S. Department of Homeland Security, U.S. Department of the Treasury and U.S. Customs and Border Protection. Detroit Axle is also suing the heads of those departments in their official capacity.

The suit asks that the Trump administration’s elimination of the de minimis exemption for China/Hong Kong-made products be struck down. That would allow U.S. businesses to again import from there using the exemption. The suit also requests that the government be ordered to refund, with interest, any tariffs paid under IEEPA-imposed tariffs.

Detroit Axle is requesting a preliminary injunction that would prohibit enforcement of the de minimis exemption elimination for China and Hong Kong until at least such time as the case is adjudicated.

The Trump administration hasn’t yet responded to the suit, which was filed May 16.

The administration is facing at least more than a half a dozen lawsuits related to tariffs the president has imposed this year.

On May 21, the Court of International Trade heard arguments in a case seeking the abolishment of Trump-instituted tariffs that 12 “blue states” brought against the president. Last week, the same three-judge panel in the same court considered arguments from the government and attorneys representing five small U.S.-based businesses in another case that has the aim of seeing the tariffs tossed out. As of this writing, the panel had not issued any rulings.

$1.36 Billion
Value of imported shipments claiming the de minimis exemption in fiscal year 2024.(U.S. Customs and Border Protection)

The White House ended the de minimis exemption for products originating from China and Hong Kong on May 2, making items that had previously qualified for the exception subject to applicable tariffs and fees. Effective May 14, the administration lowered the tariff rate for previous de minimis-qualifying imports sent through the international postal network from 120% to 54%, or a $100 per shipment fee, for at least 90 days.

If products originating in China/Hong Kong that formerly qualified for de minimis come through carriers not part of the Universal Postal Union (think UPS, FedEx, DHL), then the shipments are subject to all duties applicable to the items, under the president’s order. These include a 30% tariff rate Trump currently has in place (for at least 90 days from May 14) on China-origin products, as well as Section 301 tariffs the president implemented during his first term in the White House.

Some promotional products companies that had relied on the de minimis exemption for importing from China have decried its elimination, saying the move presents considerable cost/business challenges. Others in promo welcomed the abolishment, saying the exception was an unfair loophole that disadvantaged companies that import in bulk.

Imported products originating from countries outside of China and Hong Kong remain eligible for the duty-free de minimis exemption. The White House has expressed interest in eventually eliminating the exemption completely for all imports once customs has the bandwidth to deal with the increase in processing demand that will come with such a move.