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# Section 338 in court: A U.S. cheese importer tests Canada tariffs
- URL: https://www.borealian.ca/section-338-tariff-lawsuit-gellert/
- Published: 2026-10-22T14:51:00.000Z
- Updated: 2026-10-25T14:51:29.000Z
- Description: A New Jersey importer alleges the 50 per cent duties on Canadian goods break a 1930 law. U.S. and Canadian traders await U.S. court ruling.
- Author: Beaverbrook
- Tags: Business & Markets, Trade, Tariffs, United States

On Oct. 20, Gellert Global Group, a New Jersey food importer, sued in the U.S. Court of International Trade over the 50 per cent tariffs on Canadian goods. The [complaint](https://reason.com/wp-content/uploads/2026/10/Gellert-v.-Trump-Compl.-2026.10.20.pdf?ref=borealian.ca) asks the court to declare the Section 338 duties unlawful and to order refunds with interest. The Globe and Mail [reports](https://www.theglobeandmail.com/business/article-us-food-importer-files-lawsuit-challenging-trump-tariffs-canadian/?ref=borealian.ca) that the tariffs cover some US$20 billion of Canadian goods. The court has not yet ruled.

The plaintiff is a family cheese business and imports roughly US$71 million of Canadian cheese in 2025, according to the complaint. The same filing estimates the tariffs could cost the company US$40 million a year - more than half the value of what it buys from Canada.

The duties come from Section 338 of the U.S. Tariff Act of 1930\. It lets a president impose duties of up to 50 per cent on a country he finds discriminates against U.S. commerce. The complaint alleges that no president used it to impose a tariff in the 96 years before July 2026\. "The Section 338 Tariffs are the Administration's latest attempt to exercise, through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress," it says.

Gellert Global Group makes a second allegation. Section 338 permits duties to be collected only "thirty days after the date of" a proclamation. The complaint says duties on products added on Sept. 8, including cheeses Gellert imports, were collected from Sept. 15, seven days later. It also argues that two of the three Canadian measures Washington cited, provincial liquor bans and the auto surtax, were responses to U.S. tariffs. The third, dairy quotas, falls under USMCA terms the United States negotiated, the complaint says.

U.S. officials have said the duties respond to provincial liquor bans, supply management and quotas on certain U.S. vehicles. An administration official told The Canadian Press [on background](https://www.cbc.ca/news/world/trump-tariffs-lawsuit-9.7388900?ref=borealian.ca) that the tariffs will be "vigorously defended in court." Yet the complaint cites a 2023 USMCA panel that found Canada's revised dairy measures were "not inconsistent with" the agreement. If a trade panel accepted those rules, a finding of discrimination against U.S. commerce is harder to rest on them.

Gellert pays U.S. duties on Canadian cheese, and Canada's retaliatory tariffs on the U.S. cheeses its Canadian division sells here. They are saying that the double tariffs are hurting its business. Gellert is represented by the Liberty Justice Center, which won an earlier challenge to the IEEPA tariffs, which the U.S. Supreme Court struck down on Feb. 20.

Canada is so far the only country hit with these tariffs, the Globe reports. Sara Albrecht, the Liberty Justice Center's chief executive, told CBC that Trump "has always been in love with tariffs, in my opinion, primarily because it's revenue."

Prime Minister Mark Carney suspended trade talks on Aug. 21, saying the goal was "never a deal at any price or on any deadline." The duties took effect the next day. Canada answered with counter-tariffs on Sept. 8, which, by Gellert's account, now land on an American firm that buys Canadian. The complaint was filed 59 days after the duties took effect.

The Parliamentary Budget Officer estimates that trade measures since early 2025, if permanent, could lower Canada's real GDP by about 1.4 per cent over the medium term. Only Congress can rewrite Section 338, and only the courts can decide whether the president has stretched it.

Readers in exporting firms may fairly ask what Ottawa's plan is if the court sides with Gellert. Would Canada keep its counter-tariffs on U.S. cheese if Washington were ordered to stop collecting its own? Gellert has asked for a preliminary injunction and summary judgment, and it seeks class status for other importers. When the court rules on that injunction, Canadian suppliers will learn whether their American buyers get relief before Ottawa has a deal.