A lawsuit contesting U.S. President Donald Trump’s tariffs aimed at Canada has been submitted to the United States Court of International Trade.
This lawsuit, lodged on Tuesday by the non-profit organization Liberty Justice Center on behalf of U.S. food importer Gellert Global Group, contends that Trump’s application of a trade statute from the Great Depression exceeds his presidential authority.
“Utilizing Section 338, which I believe is an inactive statute from 1930 that has never been previously implemented, made it clear to us that this is incorrect and we need to take action,” stated Liberty Justice Center CEO Sara Albrecht during an interview with CBC’s Katie Simpson from Chicago.
Following the collapse of trade negotiations in August, Trump invoked Section 338 to impose a 50 percent tariff on a variety of Canadian products.
In the subsequent month, the same statute was employed to prohibit the import of additional Canadian goods, such as motorcycles and certain alcoholic and dairy products.
Lawsuit claims Canadian policies don’t warrant tariffs
According to the White House, Section 338 grants the president the authority to levy tariffs when a foreign country disadvantages U.S. exporters compared to those from other nations, despite the statute never being applied in this manner before.
U.S. officials have indicated that the new tariffs are a reaction to provincial restrictions on U.S. liquor, Canada’s regulated dairy system, and limits on certain American vehicles.
The lawsuit filed on Tuesday claims that these Canadian policies do not justify the extensive tariffs enacted by the Trump administration.
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The lawsuit highlights that two of the measures — vehicle quotas and liquor bans — were actually responses to Trump’s own tariff initiatives.
It also asserts that Canada’s dairy supply management system is based on agreements established under the Canada-U.S.-Mexico Agreement (CUSMA), negotiated during Trump’s first term.
“This has tangible repercussions not only for importers but also for consumers in both countries,” Albrecht remarked. “Moreover, it has broader implications considering the historical ties between the two nations.”
She acknowledged that tariffs are a hallmark of Trump’s policy but emphasized that their application in this instance is misguided.
“He has consistently favored tariffs, in my view, primarily because of the revenue they generate… I can appreciate that,” Albrecht expressed. “However, in this situation, it is erroneous and infringes upon our Constitution.”
Industry Minister Mélanie Joly says Ottawa took ‘note’ of Stelco’s U.S. owner’s earnings call, which she said confirmed Cleveland-Cliffs’ support for U.S. tariffs against Canadian steel workers. Joly said her department is working closely with the union on a potential legal case and that she’ll have more to say ‘the coming days.’
A representative from the Trump administration, speaking on background, stated that the president’s decisions will be robustly defended in court. The official asserted that Tuesday’s lawsuit will not dissuade the president’s determination to ensure fairness for American workers, farmers, and businesses.
Concerns extend beyond Canada
However, the actions taken by the Trump administration are already having repercussions for U.S. enterprises.
Thomas Gellert, co-CEO of Gellert Global Group, mentioned that the company has “spent generations cultivating reliable relationships with suppliers, customers, and partners throughout the food sector.”
“These tariffs abruptly disrupt those relationships and introduce costs and uncertainties that permeate the entire supply chain,” Gellert stated in a press release.
The company is affected by the trade conflict from multiple angles. It incurs a 50 percent tariff on imports of Canadian cheese and also faces retaliatory tariffs from Ottawa on American-made cheeses sold by its Canadian division.
The company uses the case of one of its Canadian cheese suppliers to illustrate how the tariff dispute is disrupting the interconnected North American market. It sources milk from dairy farmers in Upstate New York, which is processed into brie in Canada before being shipped back to the U.S.
“The tariffs impact American farmers and businesses on both ends of that transaction,” the press release indicated.
The lawsuit raises issues that go beyond Canada, according to the press release. If the tariffs are left unchecked, any president could potentially utilize Section 338 to enact tariffs and trade restrictions without significant oversight from Congress.
The suit requests that the court deem the tariffs unlawful and mandate a refund.
Previously, the Liberty Justice Center was involved in legal challenges against Trump’s invocation of the International Economic Emergency Powers Act of 1977 concerning the so-called “Liberation Day” and tariffs related to fentanyl on Canada, Mexico, and China.
In February, the U.S. Supreme Court ruled that Trump could not legally apply the statute, known as IEEPA, as the U.S. Constitution explicitly grants Congress the authority over taxes and tariffs.