Trump Tariffs: Lawsuit Filed Over 50% Canada Duties

The latest trump tariffs fight moved into a federal courtroom on Tuesday, as a legal group that has repeatedly challenged the president’s trade policy filed suit over the administration’s 50 percent tariffs on Canadian goods. The Liberty Justice Center sued the Trump administration in the U.S. Court of International Trade in New York, arguing that the president had no legal authority to impose the duties under a Depression-era statute that no president has ever used to levy a tariff.

The lawsuit, filed on behalf of Gellert Global Group Corp., a third-generation family-run food importer and distributor based in New Jersey, targets the administration’s use of Section 338 of the Tariff Act of 1930 to justify the levies. The case, docketed as Gellert Global Group Corp. v. Trump, No. 26-cv-4636, asks the court to declare the tariffs unlawful, block the government from collecting them, and order refunds — with interest — to the importers who have already paid.

The filing marks the fourth major tariff case brought by the Liberty Justice Center, the same organization that previously sued to invalidate the president’s tariffs under other legal authorities. It arrives as the White House’s trade confrontation with Canada — one of America’s largest trading partners — continues to escalate, with Ottawa retaliating dollar-for-dollar against the American duties.

The Lawsuit: What Gellert Global Group Is Challenging

At the core of the complaint is a single legal question: did the president have the power to reach for Section 338 of the 1930 Tariff Act and impose sweeping 50 percent tariffs on Canadian products? The Liberty Justice Center says the answer is no.

Section 338 is part of the 1930 Smoot-Hawley Tariff Act, the Depression-era trade law best known for the steep duties that many economists believe deepened the Great Depression. The provision was aimed at a narrow problem: specific foreign discrimination against American commerce. It allows the president to impose tariffs to offset such discrimination — but, the lawsuit argues, it was never meant to serve as an all-purpose authorization for the executive branch to slap duties on an entire trading partner whenever a trade dispute flares up.

“No president should have the power to pull a dormant statute off the shelf and use it to impose sweeping tariffs or import bans without the limits Congress required,” said Sara Albrecht, chairman and CEO of the Liberty Justice Center. “This case is not about the president. It is about the presidency.”

The administration’s 50 percent tariffs on Canadian goods took effect in August. In the weeks that followed, the White House issued later presidential actions that both expanded the list of covered products and, in some cases, moved to exclude certain goods from being imported into the United States at all. The duties applied to a small but shifting set of Canadian imports that included alcoholic beverages, dairy products, hockey sticks, and paper goods, according to reporting on the measures. The administration selected those items based on its position that Ottawa had applied undue burdens to certain categories of American products — a claim Canada disputes and answered with its own retaliatory tariffs.

Filed on behalf of Gellert Global Group and a proposed class of importers, the lawsuit argues the administration exceeded its statutory authority and that the overreach is already causing immediate harm to American businesses, their suppliers, and their customers.

Section 338: The 1930 Law at the Center of the Case

To understand the stakes of the new case, it helps to understand just how unusual the administration’s legal theory is. Section 338 has sat on the books for more than nine decades without a single president invoking it to impose a tariff — until this year, when the White House dusted it off as part of its trade dispute with Canada.

The Liberty Justice Center’s complaint draws a sharp line between what the statute was written to do and how the administration is using it. In the organization’s reading, Section 338 permits tariffs only to offset genuine foreign discrimination against U.S. commerce — a targeted, specific-purpose tool. It does not, in that reading, hand the president a standing license to impose sweeping tariffs or import restrictions on a trading partner as leverage in an ordinary trade disagreement.

The distinction matters because the administration identified specific Canadian policies as the justification for the duties, and the lawsuit contends those policies do not fit the statute’s narrow trigger. Two of the measures the White House pointed to, the complaint says, were actually imposed by Canada in response to the president’s own earlier tariffs — making them reactions to American policy, not independent discrimination against American commerce. A third involves Canadian dairy policies that are governed by the U.S.-Mexico-Canada Agreement, the trade pact the United States itself negotiated and signed.

“Congress already gave the executive branch a tool for responding to unfair foreign trade practices: Section 301, which requires an investigation, public comment and other safeguards,” said Jeffrey M. Schwab, senior counsel and director of litigation at the Liberty Justice Center. “The administration cannot skip those protections by reaching for a 1930 statute that no president had ever used to impose a tariff.”

Why Congress — Not the President — Holds the Tariff Power

The constitutional argument running through the lawsuit is one the Liberty Justice Center has now pressed across four separate cases: the Constitution gives the power to levy tariffs to Congress, and the executive branch cannot simply shop for a new statute each time a court curbs its authority.

The complaint argues that Congress effectively superseded Section 338 decades ago when it passed Section 301 of the Trade Act of 1974, which created a detailed process — investigations, public comment periods, and other safeguards — for addressing unfair foreign trade practices. By reaching for the older, dormant provision instead, the administration bypassed the very protections Congress put in place, the lawsuit contends.

The case also accuses the administration of ignoring the guardrails inside Section 338 itself. The statute requires a 30-day waiting period before new tariffs take effect, but the complaint says the White House blew past that limit: on September 8, the administration added Canadian cheeses imported by Gellert to the tariff list, then began collecting duties just seven days later. The lawsuit seeks refunds of those prematurely collected tariffs.

“We have challenged these tariffs under IEEPA, Section 122, Section 301 and now Section 338 for the same reason: the Constitution gives tariff power to Congress,” Albrecht said. “The executive branch cannot keep moving the same policy from one statute to another and pretend the limits disappear.”

The complaint is careful to frame the fight as a question of process, not economics. “The case does not ask the court to decide whether tariffs are wise economic policy,” the Liberty Justice Center said. “It asks whether the executive branch followed the law Congress wrote.”

The Cheese Supply Chain Caught in the Middle

The human and business face of the lawsuit is Gellert Global Group, a family-run food business that has imported and distributed food products for three generations. For the company, the 50 percent duties are not an abstraction — they are a direct hit to a cross-border supply chain built over decades.

Gellert now pays a 50 percent tariff on the Canadian cheeses it imports into the United States, a cost that ripples through its pricing to suppliers and customers alike. The company estimates it could face roughly $40 million a year in taxes applied to Canadian cheese, according to reporting on the filing.

The pain cuts both ways. Canada’s retaliatory tariffs have hit the American-made cheeses that Gellert’s Canadian division sells in Canada, squeezing the company from both sides of the border at once. And the tariffs disrupt relationships that literally cross the border more than once: one of Gellert’s Canadian cheese suppliers buys milk from dairy farmers in upstate New York, processes it into brie in Canada, and ships the finished cheese back to the United States. The duties, the company says, punish American farmers and American businesses on both legs of that journey.

The complaint also highlights what it calls a mismatch between the administration’s stated justifications and the products actually taxed. Canadian cheese was added to tariff lists that were supposedly aimed at Canadian liquor policies and automobile tariffs — even though the administration’s own dairy proclamation does not cover cheese. That disconnect, the lawsuit argues, shows the duties were not tailored to the discrimination the statute requires.

“Gellert Global Group has spent generations building trusted relationships with suppliers, customers and partners across the food industry,” said Thomas Gellert, the company’s co-chief executive officer. “These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain.”

White House Tariff News: How the US-Canada Fight Escalated

The lawsuit lands in the middle of a trade confrontation that has been building for months. The United States imposed the 50 percent tariffs on Canadian goods in August, applying the duties to about $27.6 billion worth of Canadian products after trade talks between the two neighbors broke down. The administration then expanded the covered product lists through subsequent actions and, in later phases, moved to bar certain goods from entering the United States entirely.

Canada answered on September 8 with retaliatory tariffs designed to match the American duties dollar for dollar. Rather than a single flat rate, Ottawa imposed levies of 15, 25, or 50 percent on a wide range of American-origin products. The Canadian list reaches deep into everyday goods: cheese, honey, makeup and perfume, plastic kitchenware, toilet paper, cotton T-shirts, synthetic winter coats, carpets, and drywall are all covered. One notable carve-out: the Canadian surtax does not apply to goods that merely pass through the United States in transit.

The tit-for-tat cycle has threatened to damage both economies, with businesses on each side of the world’s longest undefended border absorbing higher costs and scrambling to rework supply chains. The 50 percent American duties marked an extraordinary escalation — the first time any president had enforced the Section 338 power, which the administration invoked in September as part of its accusation that Canada was discriminating against American industries.

Supreme Court Backdrop: From IEEPA to Section 338

The new lawsuit is the latest chapter in a running legal war over the outer limits of presidential tariff authority — a war the administration has been losing in court.

Earlier this year, the Supreme Court ruled that the International Emergency Economic Powers Act, the law the president had used to impose sweeping global tariffs on nearly every other country, did not actually authorize those duties. The Liberty Justice Center had successfully challenged the IEEPA tariffs, and the high court’s decision dismantled the legal foundation of the administration’s broadest tariff regime.

What followed, in the Liberty Justice Center’s telling, was a pattern: each time one legal authority fell, the administration reached for another. The group is now challenging the administration’s use of Section 122 and its attempt to deploy Section 301 — the statute Congress designed with investigations and public comment — as what the organization describes as a replacement vehicle for the same broad global tariffs the courts rejected.

The Section 338 case extends that pattern to a fourth statute. The lawsuit warns that the stakes go well beyond Canada: if Section 338 can be wielded as a broad tariff authority here, it could become a standing tool for presidents of either party to impose tariffs or import restrictions on any trading partner without meaningful congressional control.

Alongside the complaint, the Liberty Justice Center filed a motion seeking a preliminary injunction to halt the tariffs while the case proceeds, as well as a motion for summary judgment. The relief the group is asking the court to grant is sweeping: a declaration that the tariffs are unlawful, an order blocking their collection, and refunds with interest for every importer forced to pay them.

Whether the Court of International Trade agrees will shape not only the price of Canadian cheese on American shelves, but the balance of trade power between Congress and the presidency for years to come.

Source: CNBC