A third-generation New Jersey food importer asks the Court of International Trade to strike down the first presidential use of a 1930 statute, in a case that could unwind the 50 percent tariff wall on Canadian goods
NEW YORK, October 22, 2026. A family-owned food importer from Elizabeth, New Jersey, filed suit on October 20 at the United States Court of International Trade seeking to void the 50 percent tariffs the Trump administration has levied on Canadian goods under Section 338 of the Tariff Act of 1930, a provision no president had used to impose duties in the ninety-six years it has been on the books.
Gellert Global Group Corp. v. Trump was brought by the Liberty Justice Center on behalf of Gellert and a proposed class of American importers. The complaint asks the court to declare the tariffs unlawful, enjoin their collection and order refunds with interest. Motions for a preliminary injunction and for summary judgment were filed alongside the complaint, a posture that signals the plaintiffs want relief measured in weeks rather than years.
For Canadian exporters, the case is the most consequential development in the trade file since Ottawa suspended negotiations in August. It is the only live mechanism that could remove the 50 percent rate without a political settlement, and the administration has already lost twice on tariff authority this year.
The claim
Section 338 permits the president to impose duties of up to 50 percent on imports from countries found to discriminate against American commerce. The administration invoked it over the summer of 2026 after talks with Ottawa collapsed, imposing additional 50 percent tariffs on a defined list of Canadian products and prohibiting importation of others.
On September 8 the administration expanded the covered list to include cheeses that Gellert imports, with collection scheduled to begin September 15. The complaint argues that the statute requires a thirty-day waiting period before tariffs apply to newly added products, and that the administration allowed seven days. Al Jazeera, reporting on the filing, noted that duties on cheese were being collected a week after the addition.
The complaint advances four substantive arguments.
The first is constitutional. Tariff power belongs to Congress. Reading Section 338 to grant what amounts to unlimited presidential tariff authority, the plaintiffs contend, raises serious constitutional questions that the court should avoid by construing the statute narrowly.
The second concerns statutory displacement. Section 301 of the Trade Act of 1974 established a comprehensive framework for responding to unfair foreign trade practices, complete with formal investigations, public comment periods and procedural safeguards. The plaintiffs argue that framework limits recourse to the older provision. “The administration cannot skip those protections by reaching for a 1930 statute,” said Jeffrey Schwab, senior counsel at the Liberty Justice Center.
The third goes to the predicate. Section 338 authorizes tariffs only to offset discrimination against American commerce. The complaint says the administration relied on Canadian measures that do not qualify. Two of the cited Canadian policies were retaliatory responses to the administration’s own tariffs, which the plaintiffs argue cannot bootstrap a discrimination finding. A third concerns Canadian dairy policy, which is governed by the United States-Mexico-Canada Agreement and has its own dispute settlement machinery. Canadian liquor distribution policies and automobile tariffs also feature in the administration’s rationale. The complaint further argues that even if discrimination were established, the tariffs were applied to products wholly unrelated to the conduct alleged.
The fourth is procedural: the thirty-day waiting period was not observed.
The relief sought extends beyond Gellert. The proposed class covers American importers affected by the Section 338 tariffs, which would make any refund order a systemic event rather than a single-company remedy.
The plaintiff
Gellert Global Group is a third-generation family business that sources more than 4,000 food items from more than sixty countries. Its exposure to the Canadian measures runs in both directions, which is part of why its counsel selected it.
On the import side, Canadian cheeses that entered duty-free under CUSMA now carry the 50 percent rate. Fox Business reported the company estimates roughly US$40 million in annual cost from Canadian cheese imports alone. A single September 28 shipment of goat’s milk cheese valued at about US$120,000 attracted more than US$60,000 in tariffs. Al Jazeera reported the company paid more than US$520,000 in duties between September 16 and October 11.
On the export side, Gellert’s Canadian division sells American cheeses into Canada, where Ottawa’s counter-tariffs have placed dairy products including cheese at 25 percent.
The complaint describes a supply chain that illustrates the problem with treating the border as a clean line. One Canadian supplier buys milk from dairy farmers in upstate New York, manufactures brie in Canada, and ships the finished product back to American customers. The 50 percent tariff lands on a good whose primary input is American.
“Our customers are personal friends. Our employees are personal friends. People we buy from are personal friends,” said George G. Gellert, the company’s chairman. Co-chief executive Thomas Gellert said the tariffs “disrupt those relationships overnight and create costs and uncertainty.”
Sara Albrecht, chair and chief executive of the Liberty Justice Center, framed the case in institutional terms. “No president should have the power to pull a dormant statute off the shelf,” she said, adding in separate remarks that “this case is not about the president. It is about the presidency.”
The administration’s position
An administration official told Fox Business that Congress authorized the president under Section 338 to counter discrimination against American commerce, citing Canada’s treatment of American dairy, alcohol and automobile exports, and said the administration would defend the tariffs vigorously. The White House did not respond to requests for comment from other outlets.
The substance of that defence is not frivolous. Canadian dairy supply management has been a live American grievance for decades and survived CUSMA negotiations largely intact. Provincial liquor distribution monopolies have drawn American complaints at the World Trade Organization. Canada’s counter-tariffs on American autos predate the Section 338 action. The question the court will have to resolve is not whether Canada maintains policies American exporters dislike, but whether a statute drafted in 1930 and never before used for this purpose can be deployed without the procedural apparatus Congress built in 1974.
The litigation context
This is the fourth major challenge to the administration’s tariff program and the fourth brought by the Liberty Justice Center.
In February 2026 the Supreme Court ruled that the International Emergency Economic Powers Act did not authorize the tariffs the administration had imposed under it in 2025, striking down most of that program. The administration responded by rebuilding the tariff structure on alternative statutory footings. A trade court subsequently ruled against a temporary 10 percent global tariff imposed under Section 122; that decision is on appeal. A separate challenge to tariffs tied to allegations of forced labour remains pending, as does Section 301 litigation.
The pattern matters for how Canadian exporters should read the odds. The administration has not won a merits ruling on novel tariff authority this year. It has, however, demonstrated that an adverse ruling on one statute produces a replacement program under another within weeks. Even a clean plaintiff victory on Section 338 may relocate the 50 percent rate rather than remove it.
The procedural posture is the variable worth watching. A preliminary injunction suspending collection would change the cash position of every importer of covered Canadian goods immediately, and would do so before any appellate review. The Court of International Trade has shown willingness to rule against the administration at this stage.
A statute from another era
Section 338 is a product of the same legislative moment that produced the Smoot-Hawley tariff schedule, and understanding why it sat unused for ninety-six years explains much of the plaintiffs’ confidence.
The provision was drafted when American trade policy was built almost entirely on unilateral action. There was no General Agreement on Tariffs and Trade, no World Trade Organization, no network of bilateral and regional agreements, and no domestic statutory framework for investigating foreign trade practices. A broad grant of presidential authority to retaliate against discrimination fit that world.
Everything built since was built to replace it. The Trade Act of 1974 created Section 301 and with it an investigative process run by the United States Trade Representative, mandatory public comment, consultation requirements with the foreign government concerned, and defined timelines. The Trade Agreements Act of 1979, the Omnibus Trade and Competitiveness Act of 1988 and successive statutes layered further procedure on top. Congress did not repeal Section 338, but it legislated comprehensively in the field the section occupies.
The plaintiffs’ argument is that this later legislation displaces the earlier grant, a familiar statutory interpretation principle that courts apply when a specific and procedurally detailed scheme covers ground previously occupied by a general one. The administration’s counter is that Congress had the opportunity to repeal Section 338 and did not, which leaves it available.
Resolving that question will require the court to decide how much weight to give the absence of any prior presidential use. A dormant statute is not a repealed one. But ninety-six years of non-use by presidents of both parties, including presidents who faced significant trade disputes and had every incentive to reach for a fifty percent tariff authority requiring no investigation, is evidence about how the executive branch itself has historically read the provision.
Supply management and the discrimination question
The dairy element of the administration’s rationale deserves separate treatment because it is the one Canadian policy at issue that is unquestionably long-standing and unquestionably restrictive.
Canada’s supply management system for dairy, poultry and eggs combines production quotas, price setting and import controls, with over-quota tariff rates that effectively prohibit commercial volumes beyond negotiated access. American negotiators have attacked it in every bilateral and multilateral round since the 1980s. CUSMA secured incremental market access concessions and created a dispute settlement mechanism that the United States has already used, winning a panel decision on tariff rate quota allocation in 2022 and losing a subsequent challenge in 2023.
That history is the plaintiffs’ point. Dairy access is governed by an agreement both countries signed, which contains a process for exactly this complaint, and which the United States has used. Invoking a 1930 discrimination statute to impose unilateral tariffs on a matter subject to a negotiated dispute mechanism is, the complaint argues, outside what Section 338 was meant to reach.
The liquor and automotive elements are weaker predicates still. Provincial alcohol distribution monopolies have drawn complaints but operate under rules Canada has defended at the World Trade Organization. Canadian tariffs on American automobiles are retaliation for American tariffs, which makes the discrimination finding circular. The complaint argues that a measure adopted in response to the administration’s own action cannot supply the predicate for further action under a statute aimed at unprovoked discrimination.
The class question
The proposed class adds a dimension that distinguishes this case from the earlier tariff challenges.
The Liberty Justice Center’s IEEPA litigation produced a Supreme Court ruling that invalidated the underlying authority, but refund administration for importers who were not parties proceeded through customs channels rather than through a class mechanism. Seeking class treatment here is an attempt to compress that process.
Whether the Court of International Trade certifies a class of affected importers is not a foregone conclusion. The court has its own rules and a limited history with class actions, and the administration will likely argue that the existing protest and refund machinery under customs law provides an adequate remedy that makes class treatment unnecessary. Importers should therefore not assume that a plaintiff victory automatically produces a refund in their account. Individual protective filings remain the prudent course regardless of how the class question resolves.
Economic stakes
The tariffs at issue cover a substantial slice of bilateral trade. Finance Canada’s August 25 release put the covered value at C$27.6 billion effective August 22. Subsequent wire reporting on the dispute has cited approximately C$20 billion, reflecting product list changes since.
Canada’s response was symmetrical. Effective September 8, Ottawa applied counter-tariffs at 15, 25 and 50 percent matched to the corresponding American rates, covering United States goods representing C$27.6 billion in imports. Steel and aluminum products moved to 50 percent from 25. Furniture, clothing and apparel were set at 50 percent. Appliances, dairy products including cheese, and certain steel and aluminum derivatives were placed at 25 percent. “When the United States asked too much and offered too little, we chose to stand up for Canadians,” Finance Minister Francois-Philippe Champagne said.
The measurable effects are already in the trade statistics. Canadian auto exports to the United States have fallen more than 10 percent. American exports to Canada have fallen more than 20 percent, according to figures cited by The Associated Press this week. Canadian steel shipments to the United States dropped 60 percent in 2025, per the Canadian Steel Producers Association, against a baseline in which roughly 90 percent of Canadian steel exports crossed the southern border.
The dairy segment at the centre of this case is smaller in absolute terms but unusually concentrated. Specialty cheese importers operate on margins that cannot absorb a 50 percent duty, and the products are differentiated enough that substitution is slow. The result is price pass-through to American restaurants and retailers, which is the mechanism Carney referred to this week when he said the tariffs “raised costs for American families while putting Ontario workers and businesses at a disadvantage.”
The refund exposure
If the tariffs are struck down and refunds ordered, the fiscal consequence on the American side is not trivial.
Duties collected on covered Canadian goods since the August and September effective dates, at a 50 percent rate applied to a product list Finance Canada valued at C$27.6 billion annually, accrue at a rate that produces a material liability within a single quarter. The single plaintiff in this case paid more than US$520,000 over twenty-five days on one product category. Extrapolated across the full covered list and the full importer population, the refund exposure is the kind of number that shapes how vigorously an administration litigates and how quickly it seeks appellate review of any adverse ruling.
That dynamic cuts against a rapid resolution. An injunction halting prospective collection limits the growth of the liability and is therefore the outcome the administration has the strongest incentive to resist at speed. Importers should read the government’s posture on the preliminary injunction motion as the clearest available signal of how it assesses its own merits position.
What it means for importers and exporters
The immediate practical question for any importer of record handling covered Canadian goods is whether it is positioned to claim a refund if one becomes available.
Class relief does not administer itself. Refund orders in tariff litigation are reconstructed from entry data, and the burden of establishing what was paid on which entries falls on the importer. Firms should be preserving CBP Form 7501 entry summaries, duty payment records, commercial invoices and CUSMA certifications of origin for every covered entry from the September effective dates forward. Where a customs broker holds the records, written confirmation of retention is worth obtaining now. Protests and extension requests should be calendared against liquidation dates rather than against the litigation timetable, because entries that liquidate without protest can fall outside a remedy even when the underlying tariff is later voided.
Canadian exporters should be running the same exercise with their American customers. The importer of record, not the exporter, holds the claim, but the commercial relationship frequently determines who absorbed the duty. Contracts written on delivered duty paid terms put the exporter in the economic position of the claimant without the legal standing, a mismatch worth addressing in writing before any refund materializes.
On origin, CUSMA documentation remains the operative line between covered and uncovered treatment across much of the trade. Exporters who have been casual about certification because the preference produced a zero rate anyway now face a regime in which the certification determines a 50 percentage point difference. Supplier declarations, bills of materials and regional value content calculations should be audited to a standard that would survive a verification visit.
On contingency planning, the asymmetry of outcomes argues against betting the quarter on the litigation. A preliminary injunction would relieve cash pressure quickly. A denial would leave the rate in place through an appeal cycle measured in quarters. A plaintiff victory on the merits could be followed by a substitute program under a different statute, as happened after February. Pricing and inventory decisions should be made on the assumption that the tariff persists, with the refund treated as contingent upside rather than budgeted revenue.
For Canadian firms considering the Ottawa support programs announced this week and in August, the relevant tools are the Regional Tariff Response Initiative delivered through regional development agencies, the Business Development Bank of Canada’s Pivot to Grow liquidity stream with its C$1 million revenue threshold, the Canada Strong Diversification Fund for capital projects, and the tariff remission framework for exceptional relief requests. Remission applications in particular are worth filing where an input has no Canadian or third-country substitute, because the framework remains open and decisions are made case by case.
What comes next
The preliminary injunction motion is the first decision point and could come within weeks. The administration’s response to the summary judgment motion will reveal how it intends to defend the thirty-day question, which is the plaintiffs’ cleanest argument and the one least dependent on contested readings of discrimination.
Beyond the courtroom, the American midterm elections on November 3 will shape congressional appetite for reclaiming tariff authority, and the Bank of Canada’s October 28 rate decision will set the monetary backdrop against which Canadian exporters are managing working capital. Neither is likely to change the duty rate this quarter.
What the case has already established is that the legal foundations of the 50 percent tariff wall are contested on multiple fronts by litigants with a record of winning. For Canadian exporters, that is not a basis for planning. It is a reason to keep the paperwork.