A 1930 law, 50% tariffs and a new lawsuit: Trump faces fresh challenge over Canada duties

A major US food importer has filed a lawsuit challenging President Donald Trump’s 50% tariffs on certain Canadian products, arguing that the administration lacked the legal authority to impose the duties under a little-known provision of a 1930 trade law.

Gellert Global Group filed the lawsuit on Tuesday, asking the US Court of International Trade to declare the tariffs unlawful and stop their enforcement and collection. The company has also sought refunds with interest for duties it claims were unlawfully collected.

The legal challenge comes after trade negotiations broke down earlier this year between Washington and Ottawa, prompting the US to impose tariffs on billions of dollars’ worth of Canadian goods and triggering retaliatory measures from Canada.

Why is a US food importer challenging Trump’s 50% Canada tariffs?

In its lawsuit, Gellert Global Group described the tariffs as the Trump administration’s “latest attempt to exercise, through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress.”

The company argues that Trump lacked the authority to invoke Section 338 of the Tariff Act of 1930 to impose the duties on Canadian products.

The provision, part of the Smoot-Hawley Tariff Act of 1930, is a rarely used legal mechanism that the administration relied on to introduce the 50% tariffs. The duties took effect in August.

The lawsuit asks the trade court to rule that the tariffs are unlawful and halt their enforcement and collection. It also seeks the return of duties already paid, along with interest.

The case adds to the legal challenges facing Trump’s tariff policies, with businesses questioning the administration’s authority to impose duties under different provisions of US law.

Which Canadian products face Trump’s 50% tariffs?

The US tariffs cover billions of dollars’ worth of Canadian goods, including hockey sticks. The administration has subsequently added products such as cheese, motorboats and aluminium goods to its list of targeted imports.

Some products, including road salt and cement, have been exempted from the duties. Trump has also moved to ban imports of various Canadian alcoholic and dairy products.

The measures have prompted retaliation from Ottawa, intensifying a trade dispute between the neighbouring countries.

Although the tit-for-tat tariffs have affected a relatively small share of total bilateral trade, the dispute has strained relations between the US and Canada, two of each other’s most important trading partners.

Trump’s repeated suggestions that Canada should become the 51st US state have added to the diplomatic tensions.

How does the lawsuit fit into Trump’s wider tariff battle?

Since returning to the White House last year, Trump has imposed broad tariffs on US trading partners, including allies and competitors, while separately targeting industries such as steel and automobiles.

His tariff policies have faced legal scrutiny over the extent of presidential authority to impose duties without congressional approval.

In February, the US Supreme Court struck down Trump’s country-specific tariffs, triggering a wave of refund claims by businesses. However, sector-specific duties remained in place.

Following the ruling, the administration turned to other legal mechanisms to rebuild its tariff regime. The Supreme Court decision nevertheless restricted Trump’s ability to impose new duties on trading partners rapidly.

The latest lawsuit focuses specifically on the administration’s use of Section 338 of the Tariff Act of 1930 for the Canadian tariffs.

The court’s decision could determine whether the disputed duties can remain in force and whether Gellert Global Group is entitled to refunds. Other businesses that have paid the tariffs may also be watching the proceedings for their potential implications.