U.S. Court Rules Trump Can End Tariff Exemption for Parcels Valued Under $800

According to foreign media reports, the U.S. Court of International Trade recently issued a ruling that President Donald Trump has the authority to terminate the de minimis tariff exemption for inbound parcels valued at $800 or less, dismissing a lawsuit challenging the related earlier administrative action.

Trump first proposed ending the exemption back in 2025, citing that low-value shipments are used to evade tariffs and smuggle drugs. This policy adjustment has sparked concerns among small businesses. Industry analysts note that small businesses have far less buffer to absorb cost shocks than large consumer platforms such as SHEIN and Temu, both of which were previously affected by U.S. moves to scrap related exemption policies for Chinese goods.

The core dispute in the lawsuit centered on whether Trump had the authority to cancel the exemption, and the court ultimately ruled that the relevant action complied with legal provisions. Trump mentioned the ruling in a social media post, stating that the relevant clause had become a massive loophole for practices including tariff fraud.

On the same day the court issued the ruling, the Trump administration released a report estimating that the U.S. loses approximately $19 billion to $26 billion in tax revenue annually due to other countries evading tariffs by transshipping goods through third countries. The report shows that after the 2018 tariff policies were introduced, China shipped goods to Mexico, Malaysia and other countries for packaging and limited assembly before re-exporting them to the U.S. Such transshipment practices have made U.S. import data from China appear to decline, but have not actually curbed the expansion of China's manufacturing sector.

A White House trade advisor revealed in a press call that China transships exports through more than 40 countries, and that upcoming new U.S. trade frameworks will include provisions to penalize trading partners engaged in tax evasion via transshipment. Currently, U.S. Customs and Border Protection has launched an artificial intelligence prototype program to identify transshipment activities. Once an importer is found to have falsified the country of origin of goods, tariffs can be retroactively imposed on goods they imported over the past year.

The tariff policies rolled out during Trump's second term have faced multiple rounds of legal challenges. In February 2026, the U.S. Supreme Court ruled that his global tariffs exceeded his authority, dealing a blow to his power to impose tariffs unilaterally. However, sector-specific tariffs were not affected by that ruling, and Trump has since introduced new tariff policies using other authorities. As of August 2026, the U.S. trade deficit for the year stands at $371 billion, a reduction of approximately $189 billion compared with the same period last year.