Labor & Employment Law Daily Wrap Up, LITIGATION NEWS, TRENDS—Family-run auto parts business sues over tariffs, (May 22, 2025)

By Brandi O. Brown, J.D.

“[A]s a result of recent drastic and unlawful changes in trade policy, this American success story—and the jobs of its hundreds of U.S. employees in Michigan—could be wiped out in a matter of months.”

Detroit Axle, a 35-year-old family-run retailer and distributor of auto parts, has filed suit against the Department of Commerce and various other federal agencies and leaders, alleging that their business model is reliant on “U.S. policy—as reflected in congressional statutes and low-tariff trade agreements—that encouraged mutually beneficial international trade.” They allege that they contract with Chinese manufacturers “that can produce auto parts more cheaply than can American manufacturers and can produce parts that are not made by any American manufacturers” and that these contracts enable them “to reach more customers with lower prices.” In turn, this has allowed them to employ hundreds of American workers.

De minimis exemption. They point to the fact that the United States began pulling back from its free-trade commitments in 2018 and that between 2018 and 2020, the President imposed tariffs on Chinese goods, including those auto parts imported by Detroit Axle, leading it to “turn[] to a pillar of U.S. free-trade policy—the statutory de minimis exemption” and then to open a second distribution facility in Mexico. That new facility, they allege, “has been a lifeline for the company” and allowed them to halve the effects of the increased Chinese tariffs.

Closure by June. However, they allege, now the President is purporting to eliminate the statutory de minimis exemption for Chinese imports, which has the effect of subjecting their shipments from Mexico to pre-existing tariffs, including those under the International Emergency Economic Powers Act. In turn, this has had a “swift and catastrophic” impact on their business. It alleges that by the end of June, it will exhaust its existing inventory and “will be forced to close the doors of its Michigan facilities and lay off hundreds of employees.”

Detroit Axle alleges that the government’s actions are unlawful because they exceed the President’s statutory authority and are arbitrary and capricious in violation of the Administrative Procedure Act. They also allege that the IEEPA tariffs applicable to Detroit Axle are unlawful.

The lawsuit was filed in the United States Court of International Trade; the case is No. 1:25-cv-00091.

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