A federal trade court on Thursday upheld President Trump’s elimination of the “de minimis” exemption, the tariff loophole that had allowed goods valued under $800 to enter the U.S. duty-free and tax-free.
The U.S. Court of International Trade ruled that the president had legal authority under the International Emergency Economic Powers Act to rescind the exemption. A Michigan auto-parts distributor had sued, arguing Trump lacked the power to scrap it. The three-judge panel disagreed, finding the action did not improperly exercise the power of the purse or the power to legislate.
Trump celebrated the ruling on Truth Social as a “BIG WIN” against “one of the most DESPICABLE loopholes in American Trade Policy.” He said foreign shippers had used the exemption to send packages duty-free with far less scrutiny, turning it into a pipeline for tariff cheats, fentanyl traffickers, counterfeiters, and other criminals. In 2024 alone, the loophole cost the U.S. an estimated $10.8 billion in lost tariff revenue, with a large share of narcotics and counterfeit seizures coming through that channel.
“The Importers sued. Today, THEY LOST,” Trump wrote. He said closing it makes America safer, better protects workers, and frees up billions in tariff revenue that can support the military, tax relief, no tax on tips, and no tax on Social Security.
