Full tariff refunds for de minimis imports? US says no
Detroit Axle is continuing its legal challenge in the U.S. Court of International Trade, seeking refunds for tariffs the company says it should never have been required to pay after the federal government eliminated the long-standing de minimis duty exemption.
The latest court filings highlight an important legal question that remains unresolved even after the U.S. Supreme Court struck down many tariffs imposed under the International Emergency Economic Powers Act (IEEPA): Can the government lawfully suspend the de minimis exemption under the same authority? (Supply Chain Dive)
A Different Issue Than the IEEPA Tariff Refunds
Earlier this year, the Supreme Court ruled that the Trump administration exceeded its authority when it imposed certain tariffs under IEEPA, paving the way for importers to recover billions of dollars in unlawfully collected duties.
Detroit Axle's lawsuit, however, goes a step further.
The company argues that eliminating the de minimis exemption effectively imposed duties on shipments that Congress intended to enter the country duty-free. As a result, Detroit Axle believes it is entitled not only to refunds of the now-invalidated IEEPA tariffs, but also to recover additional duties it paid because the exemption was suspended. (Supply Chain Dive)
Why the De Minimis Exemption Matters
For decades, the de minimis exemption allowed qualifying shipments valued under $800 to enter the United States without customs duties or formal entry procedures.
Like many companies operating in today's global marketplace, Detroit Axle incorporated the exemption into its logistics strategy to efficiently deliver automotive replacement parts to customers across the country.
After the exemption was suspended, the company became the importer of record for shipments moving from its Mexico distribution facility into the United States, resulting in millions of dollars in additional tariff costs. (Supply Chain Dive)
The Government's Position
The U.S. Department of Justice has argued that suspending the de minimis exemption is legally different from creating a new tariff.
According to the government's court filings, ending the exemption simply allowed existing tariff laws to apply to shipments that had previously qualified for duty-free treatment. Because of that distinction, the Justice Department argues that importers are not entitled to refunds for duties that were otherwise lawfully assessed under existing tariff programs. (Supply Chain Dive)
The government has also argued that Detroit Axle voluntarily assumed responsibility as the importer of record for these shipments and that those business decisions do not create an independent right to compensation. (Supply Chain Dive)
Detroit Axle's Position
Detroit Axle maintains that removing a tariff exemption has the same practical effect as imposing a new tariff.
The company's legal filings argue that if the Supreme Court determined IEEPA does not authorize the executive branch to impose tariffs, it likewise cannot be used to eliminate a statutory exemption that subjects previously duty-free goods to those same duties. (Supply Chain Dive)
Detroit Axle believes this principle is critical not only for its business but also for establishing clear limits on executive authority over international trade.
Looking Ahead
The outcome of the case could have significant implications for importers nationwide.
If the Court of International Trade agrees with Detroit Axle's position, businesses that relied on the de minimis exemption before it was suspended could gain additional opportunities to recover tariff payments beyond the refunds already being processed for unlawful IEEPA tariffs.
Detroit Axle remains committed to advocating for predictable, lawful trade policies that provide businesses with certainty, support investment in American operations, and create a fair environment for manufacturers, distributors, and consumers alike.