US Court Upholds End of Duty-Free Imports Under $800, Hitting Shein and Temu

The US Court of International Trade ruled on August 13, 2026, upholding President Trump's decision to cancel the de minimis exemption, which previously allowed imports valued below $800 to enter the United States duty-free. Trump has long advocated tariffs and trade protectionism, arguing that the loophole cost the United States billions of dollars in uncollected import tax revenue. The ruling means the duty-free channel will remain closed.

The plaintiff was Detroit Axle Company, a Michigan auto parts distributor, which sued the Trump administration in May 2025, alleging the president lacked legal authority to cancel the exemption under the International Emergency Economic Powers Act (IEEPA). Trump had attempted to use the same law to impose "Liberation Day" tariffs on nearly all countries worldwide, but the Supreme Court struck down those measures in February 2026, ruling the law did not authorize such tariffs. In this instance, however, a three-judge panel of the US Court of International Trade found that IEEPA does permit the president to cancel the de minimis exemption.

The judges wrote that the president's power to "revoke or abolish any privilege" does not violate the separation of powers, noting that cancelling the duty-free loophole "does not constitute the exercise of fiscal power" and "does not constitute the exercise of legislative power." Previously, the de minimis exemption was widely used in the retail sector, particularly by e-commerce platforms such as Shein and Temu, which sell large volumes of low-priced clothing and other goods. Some companies ship individual parcels directly from Chinese manufacturers to US consumers, while others maintain warehouses in Canada and Mexico and ship packages across the border one by one to avoid high tariffs, regardless of where the goods were actually produced.