Detroit Axle says it could close within weeks due to 'crippling' tariff policy
Published in Automotive News
Detroit Axle, a large aftermarket auto parts dealer based in Ferndale, says it may go out of business within weeks unless it gets certain tariff relief on the goods it imports from China.
The company sued President Donald Trump's administration last month over a tariff policy that ended the "de minimis" exemption, which previously allowed small-value packages from China to enter the country duty-free. In a filing Friday in the U.S. Court of International Trade, Detroit Axle urged swift action in the case, suggesting its business is near crumbling in the current tariff environment.
"Detroit Axle’s situation is dire; it will likely be forced to shutter most or all of its business and lay off hundreds of employees if it does not receive relief by the end of June," attorneys for the company wrote. "And every day that passes without relief brings new irreparable harm to the company in the form of lost business opportunities, customer goodwill, and reputation."
The family-run company, which says it employs more than 500 people total and more than 230 in Michigan, is a nationwide retailer and distributor of car parts for mechanics and do-it-yourselfers with a pair of locations in Metro Detroit.
But it says that the problem with the small-value package exception centers on its distribution operation in Juarez, Mexico, which receives parts from China before shipping them out to U.S. customers. Before, shipments worth under $800 could avoid being taxed at the U.S. border, but in early May, Trump's move to end that exemption took effect.
That has left the company to pay a "crippling 72.5% tariff on goods that it ships from its Mexico facility to consumers in the United States," its attorneys wrote. The company argues that the administration exceeded its authority and didn't follow proper rule-making procedure when it axed the small-value goods exception.
The retailer said in court filings that it has temporarily kept its doors open — including at the Michigan locations, which also distribute parts — by fulfilling customer orders from inventory it already had on hand that wasn't subject to tariffs. But now those supplies are running out.
On Thursday, the court denied a U.S. Justice Department motion to pause the litigation amid a larger legal fight over Trump's tariffs that is pending. The order said the government attorneys must respond to Detroit Axle's requests for relief by June 20, with Detroit Axle needing to file a reply by July 7.
But the company said Friday that's simply not a fast enough timetable as it tries to save the business from "destruction."
"The company cannot absorb the massively increased costs from the 72.5% tariffs and cannot meaningfully raise prices on its cost-conscious customers," company attorneys wrote. "So by the end of June, Detroit Axle will likely be forced to close its doors and lay off hundreds of employees in Michigan."
Justice Department lawyers, as they requested to temporarily halt the case proceedings as other tariff legal challenges moved forward, argued that Detroit Axle is "hard-pressed to argue that it is suffering actual and immediate hardship" because it didn't file its case very quickly, instead waiting until about two weeks after the new policy took effect.
The Justice Department and an attorney for Detroit Axle didn't immediately respond to a request for comment Friday afternoon.
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