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A new lawsuit filed Tuesday challenges President Donald Trump's invocation of a Depression-era law to impose 50% tariffs on a range of Canadian goods. Trump in July used Section 338 of the Tariff Act of 1930 to slap those steep tariffs on Canadian hockey sticks, wine, honey, wigs, and other products in response to alleged trade discrimination by Ottawa. It was the first time the 96-year-old law had ever been used to impose a tariff. "Section 338 is a relic of the retaliation-based tariff policy" that has been "impliedly repealed" by subsequent legislation, the civil complaint filed in the U.S. Court of International Trade says. The suit was filed by Gellert Global Group, a New Jersey-based food importer that says its cheeses are covered by the tariffs. The complaint asks the court to declare the tariffs unlawful, block their enforcement, and order the Trump administration to issue refunds for duties already paid, with interest. Gellert Global is represented by the Liberty Justice Center, the same legal group that dealt a major blow to Trump's trade agenda by successfully contesting his "reciprocal" tariffs. The Supreme Court struck those tariffs down in February. The administration is in the process of refunding the estimated $166 billion that the federal government collected from importers through the reciprocal duties. The Liberty Justice Center is currently engaged in two other lawsuits against what it says is Trump's misuse of laws to impose sweeping tariffs. "This case is not about the president. It is about the presidency," the group's CEO Sara Albrecht said in a statement Tuesday morning announcing Gellert Global's suit. "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 White House did not immediately respond to CNBC's request for comment on the suit. Trump on July 20 signed three presidential proclamations targeting different sets of Canadian imports with the Section 338 tariffs in response to alleged unfair treatment in the U.S. motor vehicle, alcohol and dairy sectors. The tariffs took effect Aug. 22, after last-ditch trade talks with Canadian officials in Washington fell apart. Canada later retaliated with "dollar for dollar" tariffs on U.S. goods. Tuesday's lawsuit argues that even if the 1930 tariff law is upheld, the Trump administration did not meet the legislation's requirements when it imposed the duties on Canada. It says that the law permits tariff action "only upon finding 'as a fact'" that a foreign country is unequally imposing unreasonable charges or trade limitations on U.S. products, or that its customs rules otherwise unfairly disadvantage the U.S. "Even then, the President may impose only such duties 'as he shall determine will offset such burden or disadvantage,'" the lawsuit states. But the Canadian actions cited in Trump's proclamations "do not discriminate against the United States," it says. Two of those actions are "Canada's responses to the President's own tariffs, including tariffs the Supreme Court has held unlawful, and retaliation is not discrimination," the lawsuit contends. Another centers on dairy quota terms that were negotiated in USMCA, the U.S.'s trilateral trade deal with Canada and Mexico. Those terms "give American cheese better access to Canada than the cheese of most of the world receives," the suit states. The suit says Gellert Global boasts more than $1.7 billion in annual revenue. In 2025, the company imported $71 million worth of Canadian cheese — including sheep's and goat's milk cheese, mascarpone, brie, camembert and the hybrid cheese borgonzola, the complaint says. Gellert says it paid no tariffs on its imports of Canadian cheese under USMCA. The Trump administration said in July that it would not renew that trade pact for another 16-year term. Under the Section 338 tariffs, "Gellert now pays a 50 percent duty on the entered value of its Canadian cheese, an estimated $40 million per year," according to the suit. While it plans to absorb the costs through the end of the year, the situation is "not sustainable long term," the company says. "If the tariffs continue, Gellert will be forced to raise the prices on its products, resulting in lost or reduced sales, decreased customer loyalty, risk of losing product placements due to higher costs, and supply chain interruptions as producers scale down or go out of business due to increased costs," the suit says.
document fetched 2026-10-21 02:56 · canonical https://cnbc.com/2026/10/20/trump-tariffs-canada-section-338-lawsuit.html