Detroit Axle, a large aftermarket auto parts dealer, says it has cut a handful of jobs so far and more layoffs are coming if it can't get tariff relief on goods it imports from China.

The Ferndale-based company, which in May sued President Donald Trump's administration over the tariffs, said in recent court filings that it's been forced to lay off 10 employees and notified the state officials of 100 more. A federal three-judge panel heard arguments in the case Thursday and could issue a decision in the coming days.

"The company is already operating at a loss, has begun firing employees, and is perilously close to going out of business," said one recent court filing, which urged swift action in the case.

The Detroit Axle job cuts come after Trump ended the "de minimis" exemption, which previously allowed small-value packages from China to enter the country duty-free. The firm argues the abrupt cancellation of that exemption could mean the end of its business, which employs more than 500 people, with almost half of those in Michigan.

Detroit Axle had leaned heavily on the small-value package carve-out in order to affordably ship China-made parts to U.S. customers — such as mechanics and do-it-yourselfers — from a distribution center in Juarez, Mexico. Without the under-$800 package exemption in place, it says those same parts now face a 72.5% tax at the border, so it's halted shipments from the facility altogether. CEO Mike Musheinesh said in a recent court filing that the tariffs had "profoundly damaged" the business.

"Detroit Axle’s price-sensitive customers would not tolerate that price increase, and Detroit Axle cannot lower its prices to absorb the impact of the tariffs," Musheinesh said in a legal declaration filed late last month, as his company has sought a preliminary injunction that would provide it tariff relief.

On Thursday, attorneys for Detroit Axle and the government made their case before the three-judge panel of the U.S. Court of International Trade in New York City. The family-run firm joins several companies actively challenging the president's ability to impose his sweeping import taxes.

Detroit Axle's case is intertwined with another tariffs case recently heard by the same New York trade court, which involved several states and businesses including VOS Selections Inc., a wine and spirits company.

In that case, the trade court agreed that the president's moves to set new duties had exceeded his legal authority under a law called the International Emergency Economic Powers Act, or IEEPA. But those broader set of tariffs are still in place while an appeal plays out.

If the VOS group ultimately wins, it will bolster Detroit Axle's argument that Trump wasn't legally allowed to unilaterally end the de minimis exemption.

But the company's attorney, Tom Dupree, on Thursday also argued that the parts distributor should prevail even if the Trump administration succeeds in the VOS case, because government officials didn't conduct the proper noticing and comment period before the tariff exemption ended.

A government lawyer, Sarah Welch, pushed back on that idea, stating that the Detroit Axle case should be treated separately from VOS, and that a portion of a Trump executive order that axed the de minimis exemption could live on even if his other tariffs are legally halted. Government attorneys have argued that the end of the de minimis exemption hasn't actually had a significant impact on the company, pointing out that Detroit Axle didn't file its case for a couple of weeks after the new policy became official.

One of the judges said that under the recently-signed One Big Beautiful Bill Act, Trump's sweeping policy legislation, the de minimis exemption is formally set to end in 2027 anyway. Dupree said that later timeframe is OK, and gives Detroit Axle time to adapt its business model, whereas Trump's unilateral order ending the exemption earlier this year did not.

Musheinesh, in his recent legal declaration, said the company has fulfilled orders from a stockpile of parts at its Michigan facility. But as that supply has been depleted, it has been forced to import some of its parts from the Mexico facility, "paying millions of dollars in tariffs on them before selling them to customers, often at a loss. When the pre-tariff inventory runs out, the business will no longer make economic sense."

He said the company's can't quickly shift to non-Chinese suppliers because it has long-term contracts with those companies, non-Chinese suppliers cost more, and they don't offer all products at the same quality level.

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