Trump Sued Over 50% Canada Tariffs in Landmark Challenge to Dormant 1930 Trade Statute

The Trump administration has been taken to court over its 50 per cent tariffs on Canadian goods, in a legal challenge that attacks the president’s reliance on a provision of American trade law that has never been used before.

The lawsuit was filed on Tuesday in the US Court of International Trade in New York by the Liberty Justice Center, a non-profit legal group, on behalf of the New Jersey-based food importer Gellert Global Group Corp. The case, docketed as Gellert Global Group Corp v. Trump, 26-cv-4636, asks the court to declare the levies unlawful, grant a preliminary injunction blocking them, and order refunds with interest for importers who have paid them, according to Bloomberg Law and the New York Post.

The White House imposed the tariffs — covering some $20 billion worth of Canadian products including cheese, alcohol, hockey sticks, cement and paper goods — after trade negotiations between Washington and Ottawa broke down in August. The duties took effect in early September, and the administration subsequently expanded the list of goods covered, while banning the import of certain Canadian products outright, according to the reports.

At the centre of the complaint is Section 338 of the Smoot-Hawley Tariff Act of 1930. The nearly century-old provision was designed to protect American business against foreign trade discrimination, but it has lain dormant — unused by any president — until now. The Liberty Justice Center argues that nothing in the provision authorises the executive branch to impose sweeping tariffs or import restrictions whenever a trade dispute arises.

“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,” the group’s chairman and chief executive, Sara Albrecht, said in a statement.

The plaintiff further contends that the 50 per cent rate bears no relation to the statute’s requirement that duties “offset” the actual burden or disadvantage imposed by the foreign practice, and that the administration failed to observe a 30-day waiting period required by the law — collections reportedly began within about a week of the announcement.

Gellert Global Group, a third-generation family business that imports Canadian cheese and sells American-made cheese north of the border, says the tariffs are costing it roughly $40 million a year, according to the New York Post. The company is being hit from both directions: it pays the 50 per cent duties on cheese coming in from Canada, and faces retaliatory Canadian tariffs on the American cheese it exports.

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

The White House has been contacted for comment but had not responded immediately, the reports said.

Why this challenge matters

The lawsuit is the latest round in what has become a protracted legal war over the scope of presidential tariff powers — and it is being brought by the same group that won the landmark case that forced the Supreme Court to strike down the administration’s first attempt at global tariffs under an economic emergency powers law earlier this year. That loss forced customs authorities to refund some $166 billion collected from importers, plus interest, according to Bloomberg Law.

Analysis: Why It Matters

A statute no one has ever tested

Section 338 of the Tariff Act of 1930 sits in a peculiar corner of American trade law. Written in the depths of the Great Depression — as part of the same protectionist package that helped collapse global trade — it was aimed at countering foreign discrimination against American commerce. That no president in nearly a hundred years has reached for it is, for the plaintiffs, the point. Statutes gather meaning through use; a provision that has never been exercised carries no settled judicial interpretation about what it permits. The Liberty Justice Center’s argument is that this novelty works against the government: the text simply does not speak the language of sweeping, across-the-board tariffs imposed in the middle of a trade dispute.

For trade-law watchers, the case therefore becomes a question of statutory archaeology. Courts asked to interpret a dormant provision will look at the 1930 debates, the remedies Congress had in mind, and the requirement that any duty be calibrated to “offset” a specific foreign burden. A flat 50 per cent rate applied to $20 billion of goods — from dairy to hockey sticks — looks, on that reading, like a policy choice dressed up in legal language rather than a measured response to a documented injury. That is the argument the Court of International Trade will have to weigh.

The pattern of executive improvisation

This is now the administration’s third distinct legal vehicle for imposing tariffs, and the trajectory tells its own story. The first attempt rested on the 1977 International Emergency Economic Powers Act — and was struck down by the Supreme Court. The third round, applying global tariffs on dozens of economies over forced-labour concerns, was built on Section 301; a three-judge panel heard arguments in that fight in late September and a ruling is expected in the coming weeks. Section 338 is the second leg of the stool, and it suggests an administration working methodically down a list of old statutes in search of one that will hold.

That pattern strengthens the plaintiffs’ hand politically, if not necessarily legally. Each successive improvisation makes it easier for challengers to frame the tariffs not as exercises of congressionally granted authority but as a search for any plausible legal cover — a framing that courts are institutionally sensitive to when separation-of-powers questions are at stake.

The business arithmetic

The complaint’s economics deserve attention because they cut against the administration’s own trade rationale. Tariffs are, in theory, instruments of leverage: they raise the cost of foreign goods to protect domestic producers or pressure a foreign government. But Gellert’s situation shows the other side of the ledger. A company that has built its business over three generations on cross-border food supply chains pays the 50 per cent duty going south and the retaliatory duty going north. There is no domestic competitor being protected here — only an American importer and exporter being squeezed from both ends.

Multiply that by the hundreds of American firms embedded in the Canadian supply chain — Canada is the United States’ largest trading partner — and the “immediate harm to American businesses” alleged in the complaint becomes a question of macroeconomic significance. It is one reason courts are sometimes willing to grant preliminary injunctions in tariff cases: the harm of duties paid while a case is litigated is real, cumulative, and difficult to undo even with refunds.

Canada and the wider fracture

The timing matters beyond the courtroom. The tariffs arrived after US-Canada trade talks collapsed in August, and they sit inside a broader deterioration of the relationship between the two countries — the same week, Alberta voters rejected a separatist referendum in a result welcomed by Prime Minister Mark Carney, a reminder of how frayed Canadian politics have become. Tariffs that were supposed to be leverage are instead becoming structural: retaliatory Canadian duties, banned alcohol imports, and now a federal court case.

For Ottawa, the lawsuit is not unwelcome. It transfers the question of whether the tariffs are lawful from a bilateral negotiation — where Washington holds the larger hand — to a courtroom, where it does not. If the Court of International Trade issues a preliminary injunction, the administration would face the prospect of unwinding the levies while the case proceeds — a second forced retreat in a year.

What to watch next

1. The injunction decision. If the Court of International Trade grants a preliminary injunction blocking the 50 per cent tariffs, the administration would have to suspend collections while the case is litigated — a major operational and political reversal.
2. The Section 301 ruling. A three-judge panel heard arguments in late September on the administration’s third round of global tariffs; its decision, expected in the coming weeks, will shape how courts treat the wider tariff strategy.
3. The 30-day waiting period claim. The allegation that duties were collected within about a week of the announcement, rather than after the required 30 days, is a narrow but potentially fatal procedural point — one that requires no grand constitutional theory to win.
4. Retaliation dynamics. How Ottawa responds — whether Canada’s own retaliatory tariffs escalate or pause while the American case proceeds — will determine whether this remains a legal dispute or becomes a full trade war again.
5. The refund question. If the plaintiffs win, the fight will shift to the scale of refunds owed to importers — a number that could run into the billions, on top of the $166 billion already ordered returned after the Supreme Court ruling.

Sources

• Bloomberg Law — Trump Administration Sued Over 50% Tariffs on Canadian Goods
• New York Post — Trump administration sued over 50% tariffs on Canadian products
• BBC (via EuropeSays) — Trump sued over Canadian tariffs in latest legal challenge