A legal challenge has been filed in the U.S. Court of International Trade seeking to block the Trump administration’s recent tariffs on Canadian goods. The lawsuit, lodged Tuesday by the Liberty Justice Center on behalf of New Jersey-based food importer Gellert Global Group, targets the use of Section 338 of the Smoot–Hawley Tariff Act, a nearly century-old law invoked for the first time this summer.

In August, the Trump administration imposed 50% tariffs on approximately US$20 billion worth of Canadian products, including dairy, electronics, and furniture, citing alleged discriminatory practices by Canada. Gellert Global Group, a significant importer of Canadian cheese with imports valued at roughly US$71 million in 2025, claims the tariffs have caused “direct and irreparable” harm, potentially costing the company an estimated US$40 million annually. The lawsuit seeks class-action status to represent other affected businesses.

Section 338 had not been previously utilized, making this the first legal test of the statute. The Liberty Justice Center argues that the administration is exceeding its authority by applying this law, which was designed for a different purpose and assigns tariff powers to Congress. The lawsuit contends that the tariffs were enacted based on misinterpretations of the statute, which is intended to allow presidential retaliation against foreign countries that discriminate against U.S. companies.

The Trump administration based its tariffs on three Canadian policies it deemed discriminatory: the country’s dairy supply management system, countertariffs imposed by Canada on U.S. automobiles, and provincial bans on U.S. liquor sales. The lawsuit disputes these claims, noting that two of the measures were responses to U.S. tariffs, some of which have been ruled unlawful by the U.S. Supreme Court. It also points out that the dairy quotas in question were established under the United States-Mexico-Canada Agreement (USMCA), which was ratified by Congress, and purportedly offer American cheese better access than most other foreign products.

Canada remains the sole country to face tariffs under Section 338. The tariffs were first threatened in July as leverage during stalled trade talks, aiming to prompt Canada to discuss lifting countermeasures in exchange for limited U.S. tariff relief. Negotiations intensified in August but collapsed after Canadian Prime Minister Mark Carney withdrew, leading to the enactment of the tariffs. Canada responded by imposing its own countertariffs on about US$27 billion in American goods.

The lawsuit does not address other U.S. tariffs on Canadian products enacted under different statutes, including Section 232 of the Trade Expansion Act of 1962, which targets metals, automobiles, and wood products, and Section 301 of the Trade Act of 1974, which covers additional sectors. While Section 301 tariffs face separate legal challenges, Section 232 tariffs are generally considered to have a firmer legal foundation, having survived earlier litigation during the previous Trump administration.

This case is part of a broader wave of lawsuits contesting the Trump administration’s use of executive authority to impose tariffs. In a landmark decision in February, the U.S. Supreme Court struck down a key baseline tariff program, prompting the administration to seek alternative legal grounds for its trade actions. That case, like the current one, originated in the Court of International Trade and went through multiple appeals over ten months before resolution.