Background
Axle of Dearborn, doing business as Detroit Axle, distributes auto parts and structured part of its business around the statutory de minimis exemption, which permitted qualifying shipments valued at no more than $800 to enter the United States duty-free. Beginning in 2025, the President invoked the International Emergency Economic Powers Act to suspend that treatment, initially for certain countries and later worldwide.
After the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs, Axle continued its separate challenge to the suspension of de minimis treatment. Counts I and II of its amended complaint alleged that IEEPA did not authorize the suspension and that the agencies implementing it acted arbitrarily and capriciously under the Administrative Procedure Act. Count III challenged the now-invalidated IEEPA tariffs. Axle sought partial summary judgment on Counts I and II; the Government cross-moved on Counts I and III and moved to dismiss Count II.
The Court’s Holding
The three-judge panel held that IEEPA authorizes the President to rescind de minimis treatment. IEEPA permits the President, following a qualifying national-emergency declaration, to nullify or void the exercise of any “privilege” involving property in which a foreign country or national has an interest. Because Congress expressly described de minimis treatment as a “privilege,” the court concluded that the statutory language encompassed its suspension.
The court rejected Axle’s separation-of-powers arguments. It reasoned that suspending the exemption did not impose new tariffs but subjected low-value goods to duties otherwise imposed or authorized by Congress, and that the President was executing authority delegated by Congress rather than legislating. The court also held that the agencies’ implementation of the presidential directive was ministerial and therefore not reviewable under the APA. It denied Axle’s motion and granted the Government summary judgment on Counts I and II, while denying the Government’s motion to dismiss Count II as moot.
As to Count III, the court denied the Government’s summary-judgment motion and deferred judgment. The Supreme Court had already held that IEEPA does not authorize presidential tariffs, but questions concerning Axle’s requested refunds remained connected to separate liquidation and reliquidation proceedings.
Key Takeaways
- IEEPA’s authority to nullify or void the exercise of any “privilege” permits the President to suspend the statutory de minimis import privilege during a qualifying national emergency.
- The court distinguished suspending duty-free treatment from imposing tariffs: suspension applies duties otherwise established or authorized by Congress rather than creating new tariff rates.
- Agencies that merely implement a lawful and binding presidential directive without exercising discretion take ministerial actions that are not reviewable under the APA.
Why It Matters
The decision preserves the executive branch’s IEEPA-based suspension of duty-free de minimis treatment through the period preceding Congress’s statutory repeal of the exemption, scheduled to take effect July 1, 2027. It also draws a significant line between the tariff power rejected by the Supreme Court and the power to suspend a congressionally designated import privilege.
For importers, the ruling limits APA challenges directed at agencies carrying out nondiscretionary presidential trade directives. Such actions may still be challenged as unconstitutional or beyond the President’s statutory authority, but not as arbitrary and capricious agency decision-making when the agencies exercised no independent discretion.