US President Donald Trump’s administration is facing a new legal challenge over its imposition of tariffs on Canadian goods, with a lawsuit alleging that the White House overstepped its executive authority and inflicted “immediate harm to American businesses.” The legal action, filed by the Liberty Justice Center (LJC) on behalf of US food importer Gellert Global Group, targets a 50% levy on approximately $20 billion of Canadian products.
Legal Challenge Targets Section 338 of 1930 Tariff Act
The lawsuit, lodged with the US Court of International Trade, seeks to have the tariffs declared unlawful and to secure refunds with interest for affected importers. At the heart of the challenge is the administration’s reliance on Section 338 of the 1930 Tariff Act, a nearly century-old statute intended to protect US businesses against foreign discrimination. The Liberty Justice Center contends that this section does not grant the executive branch the power “to impose sweeping tariffs or import restrictions whenever a trade dispute arises.”
Sara Albrecht, chief executive of the Liberty Justice Center, emphasized that the case transcends any specific administration, stating, “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 LJC argues that the Constitution vests tariff power with Congress, and the executive branch cannot circumvent these limits by shifting policy between different statutes.
Further, the lawsuit posits that Section 338 has been superseded by Section 301 of the Trade Act of 1974. Even if Section 338 were still applicable, the plaintiffs argue, the White House has failed to establish a proper legal basis for the extensive tariffs against Canada. A procedural flaw is also cited: Section 338 mandates a 30-day waiting period before tariffs can be imposed, yet the levy on products like cheese was added to the list just one week prior to the commencement of tariff collection.
American Businesses Report Immediate Harm
The tangible impact of these tariffs is exemplified by Gellert Global Group, a third-generation family business based in New Jersey. The firm is currently paying a 50% tariff on cheese imported from Canada. Compounding the challenge, Gellert Global Group is also confronting retaliatory tariffs from Canada on American-made cheese it exports north of the border.
Thomas Gellert, co-chief executive of the firm, articulated the disruption caused by the levies. “These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain,” he stated on Tuesday, referring to the generations spent building supplier and customer relationships within the food industry.
The tariffs, which followed a breakdown in trade talks between the US and Canada in August, apply to a range of Canadian goods, including wine, dairy products, and hockey sticks. The White House has been contacted for comment regarding the lawsuit.
Broader Context of US-Canada Trade Disputes
This legal action is not an isolated incident but rather the fourth case brought by the Liberty Justice Center against the Trump administration’s tariff policies. Notably, the group achieved a significant victory in February this year, successfully challenging sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which were subsequently struck down.
The current dispute unfolds against a backdrop of escalating trade tensions between the US and Canada. Last month, Canadian Prime Minister Mark Carney responded to the US tariffs by matching them “dollar for dollar” with countermeasures. These Canadian duties were imposed after President Trump cited “unequal treatment” of US cars, dairy, and alcohol as justification for his administration’s actions under Section 338.
The Liberty Justice Center’s motion for a preliminary injunction to block the collection of these tariffs underscores the urgency of the legal challenge. The case, while specifically targeting the Canadian levies, represents a broader effort to define the boundaries of executive power in trade policy, asserting that the authority to impose such significant economic measures ultimately rests with Congress.
