Full Breakdown
Trump’s Section 338 Tariffs on Canadian Goods Face Legal Challenge
By Drooid · · How we work
Core Dispute: Gellert Global’s Lawsuit
On October 20, 2026, the U.S. Court of International Trade in New York received a 37-page complaint filed by the nonprofit Liberty Justice Center on behalf of New Jersey-based importer Gellert Global Group. The suit seeks a declaration that the Trump administration’s 50 percent tariffs on Canadian products under Section 338 of the Tariff Act of 1930 are unlawful, that collection be halted, and that importers be refunded with interest.
Background & Context
President Donald Trump invoked Section 338 for the first time in July 2026, targeting Canadian wine, hockey equipment, honey, wigs and other items as retaliation for alleged discriminatory treatment of U.S. automobiles, alcohol and dairy. Canada responded with “dollar-for-dollar” counter-tariffs. Critics argue that newer statutes—such as Section 301 of the Trade Act of 1974—provide procedural safeguards that the administration bypassed.
Data & Statistics
- Gellert Global reports $71 million in Canadian cheese imports in 2025 and an estimated $40 million per year loss from the 50 percent duty.
- Between September 16 and October 11, 2026, the company paid more than $520,000 in duties.
- The tariffs cover roughly $20 billion worth of Canadian goods, including dairy, wine, furniture, clothing, cement, fishing rods and hockey equipment.
Official Statements & Responses
- The White House declined comment.
- The U.S. Trade Representative’s office defended the tariffs as a lawful exercise of presidential authority under Section 338.
Criticism & Opposition
- Jeffrey Schwab, senior counsel for Liberty Justice Center, argues the administration “cannot skip those protections by reaching for a 1930 statute that no president had ever used to impose a tariff.”
- Representative Hoekstra says the cited Canadian measures “do not discriminate against the United States.”
- Legal analysts note that Section 301 requires investigations and public comment, safeguards the administration allegedly bypassed.
Conflicting Reports & Gaps
- The complaint alleges the administration violated Section 338’s 30-day waiting period by imposing duties on cheese seven days after adding it to the tariff list (Sept 8 -> Sept 15). No public timeline has been provided.
- While the lawsuit quantifies a $40 million annual cost to Gellert, the administration has not released an independent estimate of the broader impact on U.S. importers.
- The Supreme Court’s February 2026 decision striking down most 2025 tariffs is cited, but its reasoning on Section 338 authority remains unsettled.
Verbatim Quotes
- “No president should have the power to pull a dormant statute off the shelf and use it to impose sweeping tariffs.” — Liberty Justice Center
- “Congress already gave the executive branch a tool for responding to unfair foreign trade practices: Section 301, which requires an investigation, public comment and other safeguards,” — Jeffrey M. Schwab, senior counsel, Liberty Justice Center
What’s Next
The Court of International Trade will first consider a motion to certify a class of affected importers. A decision on the merits could set precedent for the future use of dormant trade statutes and may prompt the administration to seek alternative legal authorities for any further tariffs on Canada. The case is expected to proceed through briefing and oral argument within the next several months.
