A new legal challenge is putting the Trump administration’s trade policy toward Canada under scrutiny. Gellert Global Group, a family-run food importing company, has filed a lawsuit seeking to overturn the 50% tariffs imposed on a range of Canadian imports, arguing that the administration exceeded its legal authority and imposed costs on businesses operating across the border.
Filed Tuesday with the U.S. Court of International Trade, the complaint asks the court to invalidate the duties, stop their collection and order refunds. The company alleges that the tariffs, which apply to approximately $20 billion worth of Canadian goods, have disrupted established supplier relationships and increased operating costs.
The lawsuit, filed on behalf of Gellert Global Group, challenges President Donald Trump’s decision to invoke Section 338 of the Trade Act of 1930. The administration used the provision to introduce the tariffs earlier this year, despite the law reportedly having remained unused for tariff imposition throughout its 96-year history.
A decades-old trade law at the center of the dispute
Section 338 authorizes a U.S. president to impose tariffs of up to 50% in response to discrimination by a foreign country against American commerce. Gellert’s complaint argues that the administration failed to identify sufficiently the Canadian policies that would justify using the provision.
The company also contends that Section 338 has been superseded by more recent trade legislation, particularly Section 301 of the Trade Act of 1974. The Trump administration has already relied on Section 301 to impose other tariffs, some of which have also faced legal challenges.
Beyond questioning the legal basis for invoking Section 338, the complaint disputes how the administration applied it. According to the lawsuit, the duties were extended to products that were not connected to the alleged discrimination by Canada. The administration subsequently expanded the list of affected goods without observing a required 30-day waiting period, the company alleges.
The original decision to impose the tariffs was part of a wider escalation in U.S.-Canada trade tensions. The duties were introduced under the 1930 legislation earlier this year, with the administration’s move announced as part of its tariff measures against Canadian imports.
Sara Albrecht, chairman and CEO of the Liberty Justice Center, the legal services organization representing Gellert, said the case concerns the limits of executive authority.
“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,” Albrecht said in an Oct. 20 press release.
The Liberty Justice Center has previously brought similar legal challenges against tariffs introduced by the Trump administration.
Trade tensions between Washington and Ottawa continue to escalate
The lawsuit comes amid a prolonged trade dispute between the United States and Canada. Negotiations between the two countries collapsed on Aug. 21, the day before the 50% tariffs took effect on Aug. 22.
Trump had initially announced the duties in late July, prompting negotiations between the two trading partners. However, Canadian Prime Minister Mark Carney eventually withdrew his negotiators, arguing that the newly proposed terms would not benefit Canada. The breakdown in talks was followed by the implementation of Canadian retaliatory tariffs in September.
Washington responded by extending the 50% duties to additional Canadian goods and introducing import bans affecting products including motorcycles and beer. The administration’s decision to expand the measures further intensified the trade conflict and increased uncertainty for businesses on both sides of the border. The deterioration in negotiations and the implementation of the tariffs were detailed in an earlier report on the stalled U.S.-Canada talks.
For James Kim, an international trade partner at ArentFox Schiff, the legal question will largely concern the boundaries Congress established when it granted the president tariff-setting authority.
“The fight is likely to center over the limits Congress put on that authority,” Kim wrote in a LinkedIn post.
Kim questioned whether the Canadian measures constituted discrimination under Section 338 or retaliation for U.S. tariffs. He noted that the two descriptions are not necessarily incompatible, since retaliatory action could still qualify as discrimination under the statute.
He also raised a separate issue: even if the legal conditions for using Section 338 were satisfied, the court may need to examine whether the 50% tariffs actually offset the burden on U.S. commerce, as the law requires.
Food supply chains exposed to additional costs and uncertainty
Gellert Global Group’s challenge highlights the impact of the trade dispute on companies whose operations depend on cross-border supply networks. The complaint says the tariffs have harmed the business, which relies on trade between the United States and Canada at several stages of production for certain cheeses.
Specialty cheeses were added to the list of products subject to Section 338 tariffs in September, extending the measures into a category directly relevant to the company’s business.
Thomas Gellert, co-CEO of Gellert Global Group, said the duties had undermined commercial relationships built over generations.
“Gellert Global Group has spent generations building trusted relationships with suppliers, customers and partners across the food industry,” he said in the Liberty Justice Center’s release. “These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain.”
The company’s case therefore raises concerns beyond the immediate cost of the duties. For importers operating through established supplier networks, sudden tariff changes can affect purchasing decisions, commercial agreements and the predictability of cross-border production.
A new challenge in a growing series of tariff cases
The lawsuit adds to several legal challenges brought by businesses and state governments against tariffs imposed by the Trump administration. Previous cases have questioned duties adopted under the International Emergency Economic Powers Act (IEEPA), as well as other measures based on separate statutory authorities.
These challenges include litigation over the administration’s Section 122 tariffs, a separate case brought by companies against tariffs before the Court of International Trade (see the Burlap & Barrel and Basic Fun litigation), and legal action concerning Section 301 tariffs and forced-labor-related duties challenged by 25 states.
The administration has also faced challenges to tariffs imposed under IEEPA. In February, the Supreme Court struck down those levies, ruling against the administration’s reliance on that law as the basis for the tariffs. The dispute followed earlier litigation over the legality of the administration’s trade measures, including the appellate court decision on Trump’s tariffs.
In May, the Court of International Trade separately ruled that a temporary 10% tariff introduced by Trump following the IEEPA decision was illegal. The administration appealed that ruling, although the duties in question have since expired. The proceedings were covered in a report on the trade court’s decision.
Despite these earlier setbacks for the administration, the legal grounds of the Gellert case may make it more difficult for the challengers to prevail.
“I would say that this is likely a harder case for the challengers than IEEPA,” Kim said. “The Supreme Court held that IEEPA did not authorize tariffs. Section 338 expressly does. That makes a challenge to the basic tariff authority a steeper climb.”
The outcome will depend on how the court interprets the conditions and limits attached to Section 338, including whether the administration adequately justified the tariffs and complied with the statutory requirements when extending them to additional products.
For companies involved in U.S.-Canada trade, the proceedings could become an important test of the extent to which the administration can use long-standing trade legislation to impose broad tariffs and import restrictions.
