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Canada tariffs lawsuit: NJ importer challenges 50% US duties

Gellert Global Group has asked the US Court of International Trade to strike down 50% tariffs on Canadian goods. It argues that the 1930 law behind them was superseded by later trade statutes. The White House says it will defend the duties.

By Rowan Ashby Published 21.10.26 07:31 UTC 7 min read

Exterior of the James L. Watson Court of International Trade Building in lower Manhattan, New York — Americasroof / Wikimedia Commons / CC BY-SA 3.0 · Source

Key takeaways

Gellert Global Group, a family-owned food importer based in New Jersey, sued on October 20, 2026 at the US Court of International Trade in New York, challenging the 50% tariffs on Canadian goods.
The case targets Section 338 of the Tariff Act of 1930. According to a September 2026 Congressional Research Service (CRS) report, this is the first time a president has expressly cited that law to impose tariffs.
The Liberty Justice Center represents the company. It argues that later trade laws superseded Section 338, and it is seeking class-action status for other affected importers.
The Associated Press reported that the White House said it would "vigorously defend" the tariffs, which it presents as a response to Canadian treatment of US dairy, alcohol and auto exports.
The suit adds to a run of tariff cases in 2026, including the Supreme Court's February ruling against tariffs based on emergency powers and a May trade-court ruling against Section 122 duties.

Who filed, and where

In a Canada tariffs lawsuit filed on October 20 at the US Court of International Trade, New Jersey food importer Gellert Global Group is challenging the 50% tariffs on Canadian goods, arguing later trade laws superseded Section 338 of the Tariff Act of 1930. Trump has since exempted some Canadian imports from the tariffs, including plywood, while adding others.

The Globe and Mail reported that Gellert brought in roughly US$71 million of Canadian cheese in 2025. The company says the tariffs could cost it about US$40 million a year and that it has been "directly and irreparably" harmed. Its lawyers are asking the court to certify a class, which would let the case cover other companies paying the same duties.

Published accounts of the filing say it seeks a declaration that the tariffs are unlawful, an order stopping their collection, and refunds of duties already paid, with interest. One report says the plaintiff has also asked for a preliminary injunction while the case continues. Bullquill has not reviewed the complaint itself, and the court has not yet ruled or published a schedule.

The law being challenged: Section 338

Section 338 of the Tariff Act of 1930 (19 U.S.C. §1338) belongs to the same Depression-era law often called Smoot-Hawley. According to the CRS, it allows the president to impose duties on goods from a country that discriminates against US commerce. The rate must offset the disadvantage and cannot exceed 50%. If the discrimination continues, the president may go further and bar that country's products from entering the United States.

The administration used that power against Canada in stages. The CRS lists these dates:

Date (2026)	Action
July 20	Proclamations 11046 (alcohol), 11047 (dairy) and 11048 (motor vehicles) announce 50% duties, starting August 19
August 18	Proclamation 11056 suspends the duties until August 22
August 22	The 50% duties take effect after talks fail
September 8	Canada starts retaliatory tariffs on about C$27.6 billion of US goods. New proclamations revise the covered product lists, effective September 15
September 29	Import bans take effect on certain Canadian products, including alcoholic beverages, some dairy products and motorcycles

Source: Congressional Research Service, Report R49349 (September 14, 2026).

News reports put the goods covered by the 50% duty at about US$20 billion a year. The CRS says the barred products were worth about US$967 million in 2025, roughly 0.3% of US imports from Canada. The duties do not exempt goods that qualify under the US-Mexico-Canada Agreement (USMCA). The White House has said that, for some goods, Section 338 and Section 232 duties stack, producing combined rates of up to 100%.

The two sides' arguments

The plaintiff

The Liberty Justice Center is a libertarian legal group that took part in the litigation against the 2025 emergency tariffs. It argues that Congress later passed trade laws that give the president tariff power only in defined situations, such as national security threats or currency crises, and only after investigations and other procedures. In its view, those laws superseded Section 338 and made it obsolete. The Globe and Mail reported that the complaint calls Section 338 a statute "never designed for the purpose" of exercising a power the Constitution gives to Congress.

The complaint also disputes the factual basis for the tariffs. The administration cited three Canadian measures: the dairy supply-management system, Canadian counter-tariffs on US autos, and provincial restrictions on US liquor. The lawsuit says none of them amounts to discrimination against the United States as the statute requires. "No president should have the power to pull a dormant statute off the shelf," Sara Albrecht, the group's chair, said, according to the AP.

The administration

The AP reported that the White House said it would vigorously defend the tariffs and considers Section 338 the right tool to counter what it describes as Canadian discrimination against American dairy, alcohol and auto exports. The CRS report details those grievances. They include Canada's dairy tariff-rate quotas and its June 2025 law (Bill C-202) limiting future dairy, poultry and egg quota increases; provincial bans on US alcohol that began in March 2026; and Canada's 25% tariffs on US vehicles. The Office of the US Trade Representative did not immediately respond to the AP's request for comment.

Earlier tariff litigation

The case reaches a court that has handled several tariff challenges this year. In February 2026 the Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act does not authorize tariffs. The AP says the government then had to refund billions of dollars to importers. The administration turned to other authorities. One was a temporary 10% global duty under Section 122 of the Trade Act of 1974. On May 7, 2026, a divided CIT panel ruled that duty unlawful but limited relief to the importers with standing in the case. The government appealed, and the Federal Circuit granted a temporary stay on May 12. Separate challenges are pending against tariffs of 10% to 12.5% imposed in July on dozens of trading partners over forced-labor enforcement, and against Section 301 duties.

The Gellert case differs from those cases because Section 338 has almost no history in court. Judges will have to decide whether a 1930 provision that presidents had not expressly used for tariffs is still in force. If it is, they will also have to decide how much they can review a president's finding that another country "discriminates" against US commerce.

The trade at stake

Canada is one of the largest US trading partners in goods. Census Bureau data show that US imports from Canada fell in 2025 and that the bilateral deficit narrowed:

Period	US exports to Canada	US imports from Canada	Balance
2024	$350.6 bn	$411.8 bn	−$61.2 bn
2025	$333.6 bn	$381.9 bn	−$48.3 bn
Jan–Aug 2026	$236.0 bn	$269.6 bn	−$33.7 bn

Source: US Census Bureau, trade in goods with Canada (nominal US dollars, not seasonally adjusted; latest month August 2026, accessed October 21, 2026).

Food is a large part of that flow. The USDA's Economic Research Service says Canada supplied 18.5% of US agricultural imports in 2025. The largest items were cocoa and cocoa preparations (US$3.2 billion), rapeseed (canola) oil (US$3.0 billion), beef (US$3.0 billion), cattle (US$1.8 billion), frozen pastries and cakes (US$1.7 billion) and frozen potatoes (US$1.7 billion). Most of those products are not on the Section 338 lists. The tariffs fall more narrowly on dairy, alcohol, wood products, furniture and a set of consumer goods, so the burden lands mainly on specialist importers such as cheese distributors.

Input costs are a theme across consumer-goods companies this earnings season: Procter & Gamble said commodity and freight costs cut 150 basis points from its core gross margin. Trade policy is also moving on the investment side, where a Treasury proposed rule under the COINS Act would ban US investment in Chinese AI companies.

What it means

For importers, the immediate question is cost. The 50% duty is paid at the border by the US importer of record. Gellert's own estimate of up to US$40 million a year shows how heavily that can weigh on a business built around one product category. If the court certifies a class, any ruling on refunds could reach well beyond one company. This year's refund fights after the Supreme Court decision suggest those questions can take months to settle.

For trade policy, the case tests whether the administration can rely on older statutes after the Supreme Court closed off emergency-powers tariffs. A ruling against Section 338 would narrow the options for country-specific tariffs. A ruling for the government could encourage wider use of the provision, including its import-ban power. For US-Canada relations, the lawsuit will not change the tariffs in the short term. The duties and Canada's countermeasures stay in place unless a court orders otherwise or the two governments reach a deal.

Several things are still unknown: when the CIT will hear any request for preliminary relief, whether the government will seek to dismiss the case, and whether other importers will join it.

Frequently asked questions

Who filed the lawsuit against the Canada tariffs?

Gellert Global Group, a family-owned New Jersey importer of Canadian cheese, filed the suit on October 20, 2026. It is represented by the Liberty Justice Center and is seeking class-action status.

Which court is hearing the case?

The US Court of International Trade in New York, the federal court that handles disputes over customs duties and trade law.

What is Section 338 of the Tariff Act of 1930?

It allows the president to impose duties of up to 50% on goods from countries that discriminate against US commerce, and to ban their products if the discrimination continues. The Congressional Research Service says the 2026 Canada tariffs are the first time a president has expressly used it to impose tariffs.

What does the administration say?

According to the Associated Press, the White House said it would vigorously defend the tariffs. It presents them as a response to Canadian treatment of US dairy, alcohol and auto exports.