Trump Sued Over 50% Canadian Tariffs in New Trade Court Challenge
Cheese exporter Gellert Global Group says the 50% levies cause immediate harm and asks the court for refunds with interest
By AXY Business Desk ·
Key points
- The Liberty Justice Center sued on behalf of Gellert Global Group, arguing the White House exceeded its authority with a 50% tariff on about $20bn of Canadian goods.
- The lawsuit challenges the use of Section 338 of the Tariff Act of 1930 and argues the law does not allow sweeping tariffs whenever a trade dispute arises.
- The suit says the tariff on products including cheese was added one week before collection began, despite a required 30-day waiting period.
- Gellert Global Group pays the 50% tariff on Canadian cheese and faces Canadian retaliatory tariffs on American cheese it sells there.
- The case is before the US Court of International Trade, which is asked to order refunds with interest for affected importers.
The group that successfully sued over President Donald Trump's so-called "liberation day" import taxes has filed a new lawsuit, this time over the tariffs his administration imposed on Canadian goods. The Liberty Justice Center filed the case on behalf of Gellert Global Group, a New Jersey-based food company, asking the US Court of International Trade to find the levies unlawful and to order refunds with interest for importers that have paid them.
The lawsuit argues that the White House exceeded its authority in imposing the tariffs and caused "immediate harm to American businesses." The filing was reported on Tuesday, October 20, 2026. The levies at the centre of the case are a 50% charge on some $20bn of Canadian goods, introduced after trade talks between the United States and Canada broke down in August.
For the company at the heart of the suit, the stakes are concrete. Gellert pays the 50% tariff on cheese it brings into the United States from Canada, and it also faces retaliatory duties from Canada on American-made cheese it sells across the border. The case is therefore about more than a single trade rule. It is about whether a legal authority from almost a century ago can be used in the way the current administration has used it.
What the tariffs cover and how they work
The Liberty Justice Center says the duties reach a wide range of Canadian products, from wine and dairy products to hockey sticks. That breadth is part of what makes the case notable. Tariffs are often discussed in terms of a single sector such as steel or cars, but these levies touch food, drink and sporting goods at the same time.
For readers who do not follow trade policy closely, a tariff is a tax on goods brought into a country. The tax is paid by the importer, which is usually a company rather than the final buyer. The importer then has to decide whether to absorb the cost, accept lower profits, or pass some or all of it on to customers through higher prices. A 50% rate is high by modern standards. A product that cost $100 to bring into the country would carry a $50 duty before it reached a store shelf or a restaurant kitchen.
The legal challenge does not argue that a president can never impose tariffs. It disputes the specific legal basis the administration used for these particular duties. That distinction matters. If the court agreed only that the procedure was flawed, the government could try again on different terms. If the court found that the legal authority does not cover the situation at all, the administration would have to find another route to the same goal.
The legal argument over Section 338
The administration relied on Section 338 of the Tariff Act of 1930. That law is best known in popular history as the Smoot-Hawley Act, which raised duties on thousands of imported goods in the early 1930s and is often blamed for worsening the trade war of that period. Section 338 is an older, less frequently used provision of that same law. Its stated purpose is to protect American businesses against foreign discrimination, meaning cases in which another country treats US commerce unfairly.
The Liberty Justice Center argues that Section 338 does not allow the executive branch "to impose sweeping tariffs or import restrictions whenever a trade dispute arises." In plain terms, the group says the law was written to respond to specific acts of discrimination against American trade. It was not written to serve as a general tool that a president can switch on whenever talks with another country stall.
The lawsuit also targets the reasoning behind the duties. According to the filing, the White House pointed to retaliatory tariffs that Canada had placed on American goods as the justification for its own duties under Section 338. The group wants the court to examine whether that chain of reasoning holds. In other words, it asks whether one country's response to tariffs can serve as the legal trigger for another round of tariffs.
The filing raises a second, narrower point about timing. The lawsuit says Section 338 requires a 30-day waiting period before levies can be imposed. It argues that the tariff on products including cheese was added to the list just one week before collection began. If the court agrees that the notice period was not respected, that procedural defect could give the importers a stronger claim to refunds, even if the court were to leave the broader legal questions unresolved.
Why one family cheese business is in the case
Gellert Global Group describes itself as a third-generation family business. Co-chief executive Thomas Gellert said the company has spent generations building relationships with suppliers and customers in the food industry. For a firm like that, a tariff is not only a line item on a customs bill. It can change the terms of long-standing supply arrangements with buyers who have relied on steady prices and reliable delivery.
"These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain," Gellert said on Tuesday.
His point about the supply chain is a useful way to understand the effects. A cheese importer does not only pay the duty at the border. It may need to renegotiate contracts with distributors, restaurants and grocery buyers. It may also have to plan months ahead for shipments whose cost is uncertain, because the duty can shift if the rules change. Each of those adjustments can carry a cost that is hard to recover later.
Cases like this often attract attention because the plaintiff can show direct financial harm. A company that imports goods and pays duties at the border has a clear and measurable stake in any refund. That does not guarantee that a court will rule in its favour, but it helps explain why a business like Gellert is the kind of plaintiff that courts tend to examine closely when deciding whether a challenge can move forward.
The trade dispute behind the lawsuit
The lawsuit is the latest step in a months-long dispute between Washington and Ottawa. Canada has answered a series of US tariffs with countermeasures of its own. Canadian Prime Minister Mark Carney matched the Section 338 tariffs "dollar for dollar" last month, after Trump imposed them over what he called "unequal treatment" of American cars, dairy and alcohol.
That tit-for-tat pattern is a large part of why the dispute has spread across so many industries. When one government adds a tariff and the other responds with its own, goods on both sides of the border become more expensive to sell. Exporters can lose customers, buyers can face higher prices, and companies that depend on cross-border supply chains can find that the rules change faster than their contracts. Canada and the United States are each other's largest trading partners, so the effects reach well beyond a single product.
The new suit also has a history behind it. Trump introduced his "liberation day" tariffs in April 2025, and those duties set off a long run of court challenges. The Liberty Justice Center's earlier success against that policy is the reason this new filing is being watched closely. The group has shown that it can take a tariff policy to court and prevail. The new case tests whether a different legal authority, one that has rarely been used in modern times, can withstand the same kind of scrutiny.
That difference in legal footing is important. Courts often look closely at whether an executive action has a clear basis in statute. When the government relies on an old law in a new way, judges must decide whether the text, the history and the purpose of the law support that use. For this reason, observers will be reading the filing for what it says about Section 338 as much as for what it says about Canada.
What happens next in the case
The case now goes to the US Court of International Trade, a federal court that hears disputes over trade and tariffs. The lawsuit asks the court to rule that the levies are unlawful and to order refunds with interest for affected importers. Trade lawyers generally expect cases of this kind to take time, because they involve written arguments, possible government responses and, in many instances, appeals. The outcome will depend on how the judges read Section 338 and on whether they find the 30-day waiting period was respected.
If the court agrees with the Liberty Justice Center, the government could face a large bill for refunds on duties already collected. That would matter to every importer that paid the levies, not only to Gellert. The ruling could also pressure the administration to change how it uses Section 338 in future disputes. If the court sides with the administration, the tariffs would stay in place, and the scope of a nearly 100-year-old law would be settled in the government's favour.
For importers, the immediate practical question is whether to keep paying the duties while the case is pending, or to change where they source their goods. For consumers in both countries, the question is whether the tariffs will keep prices of dairy, wine and other goods higher over the coming months. Those prices are shaped by many factors besides tariffs, so a single court ruling would not settle them on its own.
Several developments are worth watching. The first is whether the court sets a schedule for hearings. The second is how the government responds to the argument about the 30-day waiting period, which is a narrower question than the broader debate about presidential power. The third is whether Canada changes its countermeasures in response to the lawsuit or to any new US action. Each of those steps could shift the dispute, and each would be closely followed by businesses that depend on trade across the border.
Questions and answers
Who filed the lawsuit against Trump's Canadian tariffs?
The Liberty Justice Center filed the lawsuit on behalf of Gellert Global Group, a third-generation family food business based in New Jersey. The company pays the 50% tariff on cheese it exports from Canada.
What do the Canadian tariffs cover?
The White House imposed a 50% levy on some $20bn of Canadian goods after trade talks broke down in August. The Liberty Justice Center says the products include wine, dairy and hockey sticks.
What is the lawsuit asking the court to do?
The lawsuit asks the US Court of International Trade to find the tariffs unlawful and to order refunds with interest for affected importers. It argues the White House exceeded its authority under Section 338 of the Tariff Act of 1930.
What happens next in the case?
The case will move through the US Court of International Trade, which will decide whether the Section 338 tariffs are lawful. Trade lawyers generally expect the process to take time, and the outcome could affect refunds and future trade disputes.
Topics: Donald Trump, Canada tariffs, Section 338, Liberty Justice Center, Gellert Global Group, US Court of International Trade, Trade policy
Sources: BBC Business
https://axynewsglobal.com/article/trump-sued-over-50-canadian-tariffs-in-new-trade-court-challenge