U.S. importer challenges Section 338 tariffs on Canadian goods

On October 20, 2026, U.S. food importer Gellert Global Group Corp. filed a lawsuit in the United States Court of International Trade challenging President Trump’s use of Section 338 of the Tariff Act of 1930 to impose 50% duties on certain Canadian goods. The challenge raises questions about the scope of presidential tariff authority and the statutory limits on measures responding to alleged discrimination against U.S. commerce.

What measures are being challenged?

The complaint challenges tariffs imposed through three proclamations issued on July 20, 2026, addressing alleged Canadian discrimination involving alcoholic beverages, dairy products and motor vehicles. Further proclamations issued on September 8 changing the covered product lists and introduced import bans on certain Canadian goods are also raised in the lawsuit. For further information on the scope of these tariffs, check out our previous Insights.

What does Section 338 authorize?

Section 338 of the Tariff Act of 1930 authorizes the president to impose tariffs on countries that engage in unfair or discriminatory trade practices against the United States. President Trump is the first president to invoke the provision. Unlike certain other tariff powers, Section 338 does not require a prior investigation or public participation before tariffs are imposed by the president.

What are the main legal arguments?

The plaintiff advances several alternative grounds for challenging the duties:

Whether later legislation displaced Section 338

The plaintiff argues that subsequent trade legislation, particularly Section 301 of the Trade Act of 1974, superseded or limits Section 338. Section 301 establishes a more detailed framework for responding to unfair foreign trade practices, including investigations and opportunities for public participation. The plaintiff’s position is that the administration cannot avoid those safeguards by relying on an earlier statute.

Whether the duties meet Section 338’s substantive limits

Alternatively, the plaintiff argues that the measures exceed Section 338 even if it remains available. It disputes whether the Canadian policies identified by the administration establish the discrimination contemplated by the statute and whether the duties offset the resulting disadvantage rather than go beyond it. The challenge also questions the connection between the alleged discrimination and the products targeted.

Whether collection began before the statutory waiting period expired

The plaintiff also raises a narrower timing challenge. It argues that products added by the September 8 proclamations could not lawfully become subject to the new duties on September 15, only seven days later. This issue concerns whether the 30-day waiting period applies to newly listed products when an existing proclamation is amended.

What relief is being sought?

The plaintiff seeks a declaration that the challenged duties are unlawful, an order stopping their enforcement and collection and refunds of duties already paid, with interest. It has also sought preliminary injunctive relief and summary judgment. A preliminary injunction would address relief while the case proceeds; summary judgment would ask the court to decide the merits without a trial where the applicable requirements are met. The proposed class remains subject to the Court’s certification process.

MLT Aikins continues to monitor developments in the Canada-U.S. tariff landscape. If your organization would like assistance assessing how these measures and related litigation may affect its operations, contractual arrangements or cross-border strategy, please contact our Corporate and Commercial or Competition/Antitrust, Investment and Trade teams.

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