Lawsuit challenges Trump’s use of 1930 statute for 50% Canadian tariffs

Key points

• Gellert Global Group, a New Jersey cheese importer, filed a lawsuit in the U.S. Court of International Trade challenging the legality of 50% tariffs on Canadian goods.
• The suit argues that Section 338 of the Tariff Act of 1930 is obsolete and that the administration failed to meet statutory requirements for imposing such duties.
• Trump invoked the 96-year-old law in July after trade talks collapsed, targeting dairy, alcohol, and auto sectors; Canada retaliated with its own tariffs.
• The Liberty Justice Center, which previously won a Supreme Court case against Trump’s reciprocal tariffs, is representing the importer and seeking refunds for duties paid.
• Canadian steel and lumber exports have dropped significantly, and consumer prices in Canada have risen due to the trade dispute and energy costs.

Background

The U.S.-Canada trade dispute escalated in late 2026 after negotiations broke down. In September, the U.S. implemented import bans on approximately $1 billion in Canadian goods, including alcohol and dairy, citing the Smoot-Hawley Tariff Act. Prior to this, 50% tariffs under Section 338 had already disrupted supply chains, particularly in the dairy sector, leading to retaliatory measures from Ottawa and significant economic strain for Canadian producers.

How outlets are covering it

Fox News highlights the economic pain in Canada, noting that steel exports have fallen by half and consumer prices have risen, while acknowledging that U.S. complaints about Canadian dairy access are valid. CNBC and ABC News focus on the legal challenge, emphasizing that Section 338 has never been used for trade disputes and that the administration ignored procedural limits. CBC notes that the lawsuit argues Canadian policies, such as dairy quotas, were negotiated under the USMCA and do not justify the sweeping tariffs. All sources agree that the dispute has strained the historic U.S.-Canada trading relationship, with experts warning that unchecked executive power could undermine the broader trade framework.

Why it matters

The lawsuit tests the limits of presidential authority to impose tariffs using dormant statutes. If the court rules against the administration, it could force refunds of billions in duties and set a precedent that restricts future executive trade actions. The outcome will also impact the broader U.S.-Canada relationship, which remains one of the world’s largest trading partnerships, and could influence consumer prices and supply chains in both countries.

What to watch

The U.S. Court of International Trade will review the lawsuit, potentially leading to a ruling on the legality of Section 338 tariffs. The White House has not yet responded to the suit but has indicated it will defend the president’s actions. The case could also influence ongoing trade negotiations and the administration’s approach to other tariff disputes, including those with other trading partners.