New Jersey Cheese Importer Takes Trump's Canada Tariffs to Trade Court

A New Jersey food importer sued the Trump administration on Tuesday, arguing the president lacked the legal power to impose 50% tariffs on Canadian goods. The case, filed at the U.S. Court of International Trade, tests a 1930 trade law that has never before been used in a trade dispute or reviewed by a court, according to ABC News.

The company, Gellert Global Group, is a third-generation family business that imports Canadian cheese. Fox Business reported that the firm estimates the tariffs could cost it roughly $40 million a year on cheese imports alone.

What the importer and its lawyers argue

The Liberty Justice Center, a libertarian advocacy group, represents Gellert. It asks the court to declare the tariffs unlawful, stop their collection and order refunds with interest, Fox Business reported.

The group's central argument, according to ABC News, is that Congress later passed newer trade laws that replaced the authority in Section 338 of the Tariff Act of 1930 and made it obsolete. Those newer laws limited the president's power to specific situations, such as national security threats and foreign currency crises. They also required investigations and other procedural steps first.

The lawsuit also contends that the tariffs do not offset the alleged discrimination by Canada because they cover products unrelated to the Canadian policies at issue, Fox Business reported. Sara Albrecht of the Liberty Justice Center said in a statement that no president should be able to “pull a dormant statute off the shelf” and use it for sweeping tariffs or import bans without the limits Congress set.

Thomas Gellert, the company's co-CEO, said the tariffs disrupt relationships built over generations and create costs and uncertainty across the supply chain.

What the administration has said

The White House and the Office of the U.S. Trade Representative did not immediately respond to ABC News about the suit, and Fox Business said it had asked the White House for comment. Fox Business reported that the administration has said it imposed the tariffs in response to what officials described as discriminatory Canadian trade practices that hurt American businesses.

ABC News reported that Trump used Section 338 to penalize Canada for alleged discrimination against U.S. dairy, auto and alcoholic beverage products. The administration expanded the list of covered products in September to include the cheeses Gellert imports, according to Fox Business.

Why it matters for importers and consumers

The complaint gives a concrete example of the cost to a business. Gellert previously brought in Canadian cheese without paying duties under the U.S.-Mexico-Canada Agreement, according to Fox Business. On Sept. 28, it imported a shipment of goat's milk cheese worth roughly $120,000 and paid more than $60,000 in tariffs, the complaint says.

The tariffs apply to $20 billion worth of Canadian goods, ABC News reported. Trump also announced in September an outright ban on nearly $1 billion worth of Canadian products, including alcoholic beverages, dairy products and motorcycles. Gellert says the added costs ripple through the supply chain, though the sources do not describe any effect on retail prices.

A wider legal and diplomatic fight

The suit is the Liberty Justice Center's fourth challenge to the administration's tariff policies, Fox Business reported. The earlier cases involved the International Emergency Economic Powers Act and Sections 122 and 301 of federal trade law. ABC News said the group successfully challenged earlier Trump tariffs before the Supreme Court.

In February, the Supreme Court struck down the broad tariffs Trump had imposed under a 1977 law by declaring trade deficits a national emergency. The administration had to refund billions of dollars to importers, according to ABC News. Fox Business reported that a federal trade court also ruled against replacement tariffs under Section 122, and the administration appealed. A challenge involving Section 301 is pending. ABC News added that tariffs of 10% to 12.5% imposed in July on dozens of trading partners over forced-labor concerns are also being challenged.

The dispute with Canada has also worsened. Ottawa responded to the Section 338 tariffs with dollar-for-dollar retaliation, ABC News reported. Fox Business said Canadian Prime Minister Mark Carney suspended trade negotiations in August, accusing the U.S. of making unfair last-minute changes to a potential deal. The Office of the U.S. Trade Representative disputed that account and said Canada declined to finalize terms already agreed.

What happens next

The case now goes before the Court of International Trade, a specialized court based in New York. No hearing dates or rulings have been reported. If the court sides with Gellert, the remedies it has requested include blocking collection of the tariffs and refunds with interest.

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Around Prague, based on reporting by ABC News, Fox Business