Importer Moves for PI, Judgment Against End of de Minimis for Chinese Goods
Importer Detroit Axle on May 21 moved the Court of International Trade for a preliminary injunction and summary judgment against President Donald Trump's elimination of the de minimis exemption for Chinese goods and tariffs on Chinese products. In its motion, the importer argued that it's likely to succeed on the merits of its case, which outlines two bases for finding Trump's actions unlawful: that the president exceeded his statutory authority in ending de minimis for China, and that the agency actions implementing the order are arbitrary and capricious in violation of the Administrative Procedure Act (Axle of Dearborn, d/b/a Detroit Axle v. Dep't of Commerce, CIT # 25-00091).
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Concurrently, the importer moved for an expedited briefing and hearing schedule for its case, asking the court to issue a ruling by June 27.
Detroit Axle, represented by Gibson Dunn, filed its suit last week to challenge the elimination of the de minimis exemption for Chinese products (see 2505190050). Now in its motion for summary judgment and a preliminary injunction, the importer is claiming that Congress "foreclosed" any authority the president has to drop the threshold below its $800 statutory floor. The company argued that Congress made the de minimis threshold mandatory in 1993 by changing the statutory authorization for the threshold to a "requirement that the exemption apply."
The brief said that, at minimum, if the president were to alter the threshold, he must do so via notice-and-comment rulemaking, given that this is the only way the statute says the threshold can be altered. Detroit Axle said this requirement "makes perfect sense," since the "rulemaking process is designed to give affected parties fair notice and an opportunity to minimize impacts to their businesses through the government announcing its intent to create a new rule, taking public comment on that rule, and codifying new standards that apply only prospectively."
The International Emergency Economic Powers Act doesn't give the president the power to eliminate the exemption despite his claims to the contrary, Detroit Axle added. "The Supreme Court has repeatedly applied the specific-general rule to hold that a general authorization did not grant power that would override or circumvent limitations in more specific provisions," the brief said. In this case, the statute establishing the de minimis exemption, Section 1321, "creates a specific and comprehensive scheme governing the de minimis exemption," while IEEPA "speaks generally about regulating imports."
The company also argued that eliminating the de minimis exemption for Chinese products is "causing Detroit Axle serious and imminent irreparable harm." Eliminating the exemption "has subjected Detroit Axle’s shipments from its Mexico facility," which are sourced in China, "to staggering 72.5% tariffs," the company said, adding that it "cannot substantially raise its prices in response without being undercut by competitors." The importer said it can't just "absorb" the cost of the tariffs either, since its "margins are not large enough to cover those additional costs."
The "day of reckoning" where the company will have to close its doors is "rapidly approaching," the company said, identifying late June as the time where it will likely have to close up shop.
Detroit Axle added that the elimination of the exemption also "threatens imminently to force Detroit Axle to lay off hundreds of key employees in its Michigan facilities after its pre-tariff stockpiles run critically low by the end of June." Even if the company were to prevail on the merits of its case and "restart its Michigan operations, the loss of human capital from the initial layoffs would be irreparable; the company would be unlikely to be able to rehire all the experienced employees it lost," the brief said.
The company additionally said it will suffer irreparable loss of goodwill and damage to its reputation due to the president's actions.