On Tuesday, October 20, 2026, a new front opened in the legal war over President Donald Trump's tariff policies. The Liberty Justice Center, a nonprofit legal organization, filed a lawsuit in the U.S. Court of International Trade challenging the administration's use of a Depression-era law to impose 50 percent tariffs on Canadian goods — arguing that the White House reached too far and that American businesses are the ones paying the price.

The case, brought on behalf of a New Jersey food importer and a proposed class of importers, asks the court to declare the tariffs unlawful, stop their collection, and order refunds — with interest — for duties already paid. It adds to a growing stack of courtroom challenges to Trump's tariff program, and it turns on a statute that no president had ever used to impose a tariff until this year.

Background: The 50% Tariffs on Canadian Goods

The tariffs at the center of the case were imposed over the summer. Trump levied 50 percent duties on a wide range of Canadian imports, citing what his administration described as Canada's discriminatory treatment of American cars, alcohol, and dairy products. The levies, which took effect in September, stacked on top of existing duties on Canadian aluminum, lumber, vehicles, and steel.

The list of affected products is long: cheeses and other foods, alcohol, hockey sticks, cement. The administration also moved to ban imports of certain Canadian alcohol products, including whiskey, malt beer, sparkling wine, vermouth, and cider. The tariffs hit about $20 billion worth of Canadian goods, and businesses on both sides of the border have warned of higher prices for food, raw materials, and manufactured products.

To impose them, the White House invoked Section 338 of the Tariff Act of 1930 — a provision of the Smoot-Hawley Tariff Act, the famous Depression-era protectionist law. Section 338 permits the president to impose tariffs of up to 50 percent in response to foreign discrimination against American commerce. The problem, according to the lawsuit: no president in the 96 years since the law was enacted had ever used it to impose a tariff — until now.

The tariff fight with Canada is part of a much broader trade-policy battle the administration has been waging on multiple fronts. For context on how those battles are evolving elsewhere, see our coverage of the U.S.-China trade framework talks in Kuala Lumpur and Treasury Secretary Bessent's remarks after Europe refused secondary tariffs on India and China.

What Happened on October 20

The Liberty Justice Center filed its complaint on Tuesday in the U.S. Court of International Trade in New York — the specialized federal court that hears trade disputes. The lead plaintiff is Gellert Global Group, a third-generation family-run food importing business based in New Jersey, and the suit was filed on behalf of a proposed class of importers facing the same duties.

The case is docketed as Gellert Global Group Corp v. Trump, 26-cv-4636. Alongside the complaint, the Liberty Justice Center filed motions seeking a preliminary injunction to halt collection of the tariffs and a motion for summary judgment — a signal that the plaintiffs want a fast decision.

The lawsuit says the administration exceeded its statutory authority, causing “immediate harm to American businesses, their suppliers and customers.” Gellert itself estimates the tariffs will cost it $40 million a year on cheese imports alone. The harm is not one-sided: Gellert pays a 50 percent tariff on Canadian cheeses it imports into the U.S., while Canada's retaliatory tariffs hit American-made cheeses the company's Canadian division sells in Canada. One of its Canadian cheese suppliers buys milk from dairy farmers in upstate New York, turns it into brie in Canada, and ships the finished cheese back to the U.S. — so the duties end up taxing American farmers on both sides of the transaction.

The complaint attacks the tariffs on several fronts.

1. The wrong tool for the job

Section 338 is aimed at specific foreign discrimination against U.S. commerce — it allows tariffs only to offset such discrimination. The lawsuit argues it is not an all-purpose authorization for the executive branch to impose sweeping tariffs whenever a trade dispute arises. The challenge, in the Liberty Justice Center's framing, centers on the distinction between foreign discrimination and ordinary trade disagreements. Two of the Canadian measures the administration cited arose in response to the president's own tariffs, the group says, while the third involves Canadian dairy policies governed by the U.S.-Mexico-Canada Agreement (USMCA) — the trade deal that already has its own dispute mechanisms.

2. Tariffs on unrelated products

The administration, the suit says, placed duties on products with no connection to the alleged discrimination. Canadian cheese was added to tariff lists intended to address Canadian liquor policies and automobile tariffs, even though the administration's dairy proclamation does not cover cheese. The expansion of the product list, the complaint argues, shows the statute being used as a blank check.

3. A newer law took over

The lawsuit argues that Congress superseded Section 338 with Section 301 of the Trade Act of 1974 — the modern tool for responding to unfair foreign trade practices, which requires an investigation, public comment, and other procedural safeguards. “Congress already gave the executive branch a tool for responding to unfair foreign trade practices: Section 301, which requires an investigation, public comment and other safeguards,” said Jeffrey M. Schwab, the Liberty Justice Center's senior counsel and director of litigation. “The administration cannot skip those protections by reaching for a 1930 statute that no president had ever used to impose a tariff.”

4. The 30-day rule was broken

Section 338 also requires a 30-day waiting period. The complaint says the administration added Canadian cheeses imported by Gellert to the tariff list on September 8 but began collecting duties just seven days later. The lawsuit seeks refunds of those prematurely collected tariffs.

5. The constitutional argument

Underlying all of it is the Constitution: tariff power belongs to Congress. “This case is not about the president. It is about the presidency. No president should have the power to pull a dormant statute off the shelf and use it to impose sweeping tariffs or import bans without the limits Congress required,” said Sara Albrecht, chairman and CEO of the Liberty Justice Center. The case, the group stresses, does not ask the court to decide whether tariffs are good economic policy — only whether the executive branch followed the law Congress wrote.

Who Is Behind the Lawsuit

The Liberty Justice Center is a nonprofit legal organization that has made challenging presidential tariff authority a signature project. This is the fourth time a wide-ranging tariff policy has been challenged in court during Trump's second term, according to Reuters. The group previously took on tariffs imposed under emergency powers — the Supreme Court ruled in February against most of the tariffs Trump imposed in 2025 — and it is also challenging the administration's use of Section 122 and its attempt to use Section 301 as a replacement vehicle for broad global tariffs.

“We have challenged these tariffs under IEEPA, Section 122, Section 301 and now Section 338 for the same reason: the Constitution gives tariff power to Congress,” Albrecht said. “The executive branch cannot keep moving the same policy from one statute to another and pretend the limits disappear.”

Gellert Global Group, the lead plaintiff, is a family-run food importer. “Gellert Global Group has spent generations building trusted relationships with suppliers, customers and partners across the food industry,” said Thomas Gellert, the company's co-chief executive. “These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain.” The trade friction is also pushing both sides toward other partners: Canada has been deepening trade ties elsewhere, including talks with India on a $70 billion trade deal.

Why It Matters

The case matters for reasons well beyond one cheese importer.

First, precedent. If Section 338 can be revived as a broad tariff authority here, the lawsuit warns, it becomes a standing tool that presidents of either party could use to impose tariffs or import restrictions on any trading partner without meaningful congressional control. The Liberty Justice Center's explicit aim is to keep that door closed.

Second, money. A ruling striking down the tariffs could mean refunds — with interest — for importers that have been paying the duties, and relief for supply chains facing higher costs on food, raw materials, and manufactured goods. Canada is one of America's largest trading partners, so the economic footprint is large.

Third, the pattern. The administration has cycled through legal justifications for its tariff program as courts have knocked earlier ones down — emergency powers, then Section 122, then Section 301, now Section 338. This case tests whether the new justification holds up or whether courts will see the same policy wearing a different statutory costume. The White House did not immediately respond to a request for comment on the lawsuit.

What Happens Next

The immediate question is whether the court grants a preliminary injunction. If it does, collection of the 50 percent tariffs would stop while the case proceeds — a major win for importers in the short term. The Liberty Justice Center has also asked for summary judgment, seeking a final ruling without a full trial, arguing the legal questions are clear enough to decide now.

Whichever way the Court of International Trade rules, an appeal is near-certain — trade cases of this profile rarely end at the first court. And with the Supreme Court having already struck down most of the 2025 tariffs in February, the administration's tariff program is increasingly being litigated statute by statute. Each ruling narrows or widens the legal space for the next round — and businesses trading across the northern border will be watching every step.

The courtroom fight is only one front in a worsening US-Canada relationship: the US Embassy has accused Canada of seeking to influence the 2026 midterm elections, an extraordinary public charge against a close ally.

The legal fight continues even as policy shifts: Trump has now removed the 50% tariffs on some Canadian goods, days before the midterms.