Trump sued for tariffs of more than 50% against Canada in latest trade challenge

A new lawsuit filed Tuesday challenges President Donald Trump’s invocation of a Great Depression-era law to impose 50% tariffs on a range of Canadian products.

In July, Trump used Section 338 of the Tariff Act of 1930 to impose high tariffs on Canadian hockey sticks, wine, honey, wigs and other products in response to alleged trade discrimination by Ottawa. It was the first time the 96-year-old law had been used to impose a tariff.

“Section 338 is a relic of retaliatory tariff policy” that was “implicitly repealed” by subsequent legislation, says the civil complaint filed in the U.S. Court of International Trade.

The complaint was filed by Gellert Global Group, a New Jersey-based food importer, which claims its cheeses are covered by the tariffs. The complaint asks the court to declare the tariffs illegal, block their enforcement and order the Trump administration to refund the duties already paid, with interest.

Gellert Global is represented by the Liberty Justice Center, the same legal group that dealt a major blow to Trump’s trade agenda by successfully challenging his “reciprocal” tariffs.

The Supreme Court overturned these tariffs in February. The administration is in the process of repaying the estimated $166 billion the federal government collected from importers through reciprocal duties.

The Liberty Justice Center is currently engaged in two other lawsuits over what it sees as Trump’s misuse of the laws to impose drastic tariffs.

“This case is not about the president. It’s about the presidency,” the group’s CEO, Sara Albrecht, said Tuesday morning in a statement announcing Gellert Global’s lawsuit. “No president should have the power to take away pending legislation and use it to impose drastic tariffs or import bans without the limitations Congress requires.”

The White House did not immediately respond to CNBC’s request for comment on the lawsuit.

On July 20, Trump signed three presidential proclamations targeting different sets of Canadian imports with Section 338 tariffs in response to alleged unfair treatment in the U.S. motor vehicle, alcohol and dairy sectors.

The tariffs took effect on August 22, after last-minute trade negotiations with Canadian officials in Washington failed. Canada then retaliated by imposing dollar-for-dollar tariffs on American products.

Tuesday’s lawsuit argues that even if the 1930 tariff law stands, the Trump administration failed to meet the legislation’s requirements when it imposed the tariffs on Canada.

It asserts that the law authorizes tariff action “only upon finding ‘as a fact'” that a foreign country unequally imposes unreasonable taxes or trade limitations on U.S. products, or that its customs rules unfairly disadvantage the United States.

“Even then, the President may impose only those duties ‘which he deems capable of offsetting such burden or disadvantage,'” the lawsuit says.

But the Canadian actions cited in Trump’s proclamations “do not constitute any discrimination against the United States,” he says.

Two of those actions are “Canada’s responses to the President’s own tariffs, including tariffs that the Supreme Court has found to be illegal, and retaliation does not constitute discrimination,” the suit claims.

Another concerns the terms of milk quotas negotiated under the USMCA, the trilateral trade agreement between the United States, Canada and Mexico. These conditions “give American cheese greater access to Canada than that enjoyed by cheeses from most countries in the world,” the suit states.

The suit says Gellert Global has annual revenue of more than $1.7 billion. In 2025, the company imported $71 million worth of Canadian cheeses, including sheep and goat’s milk cheese, mascarpone, brie, Camembert and borgonzola hybrid cheese, the complaint says.

Gellert claims to have paid no customs duties on its imports of Canadian cheese under the USMCA. The Trump administration said in July that it would not renew the trade deal for another 16 years.

Under the Section 338 tariffs, “Gellert now pays a 50 percent duty on the declared value of its Canadian cheese, an amount estimated at $40 million per year,” according to the suit.

Although it plans to absorb the costs until the end of the year, the situation “is not sustainable in the long term”, says the company.

“If the tariffs persist, Gellert will be forced to increase the prices of its products, resulting in lost or reduced sales, decreased customer loyalty, risk of loss of product placements due to higher costs, and supply chain disruptions as producers reduce operations or cease operations due to increased costs,” the suit states.