The First Lawsuit against the Section 338 Tariffs on Canadian Imports Has Been Filed
The Liberty Justice Center has filed a lawsuit challenging "the [Trump] administration’s use of Section 338 of the Tariff Act of 1930 to impose 50 percent tariffs on Canadian goods." The complaint is here.
The plaintiff is Gellert Global Group Corp., a company specializing in imported food products. According to the complaint, "Gellert imports Canadian cheese covered by the Section 338 Tariffs, ... specifically more than 15 product lines of cheeses, including sheep’s milk cheese, mascarpone, borgonzola, chèvre-style goat’s milk cheese, brie, and camembert." In 2025, Gellert imported "roughly $71 million worth of Canadian cheese."
In terms of the big picture here, the complaint argues that "[t]he Section 338 Tariffs are the Administration’s latest attempt to exercise, through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress." Section 338, it says, is "a relic of the retaliation-based tariff policy that Congress abandoned four years after Smoot-Hawley became law."
As to the specific legal claims, I'll give a quick rundown and offer a few comments below.
Count I: Section 338 has been impliedly repealed or, at a minimum, is controlled by Section 301 of the Trade Act of 1974.
85. Where provisions in two acts are in irreconcilable conflict, the later act, to the extent of the conflict, constitutes an implied repeal of the earlier one; and where a later act covers the whole subject of an earlier one and is clearly intended as a substitute, it operates similarly as a repeal. Posadas v. Nat’l City Bank, 296 U.S. 497, 503 (1936). And a specific policy embodied in a later federal statute controls the construction of an earlier one even absent express amendment. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000).
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88. Each Canadian practice the Section 338 Proclamations target falls within Section 301. The Dairy Proclamation finds that Canada “denies to the United States the favorable treatment that Canada provides to the EU,” that the practice is “unreasonable,” and that it burdens U.S. commerce. Proclamation 11047 ¶¶ 5–6. And a USMCA panel has found the Canadian rule it targets “not inconsistent with” the USMCA. See supra ¶ 54. The Alcohol and Motor Vehicles Proclamations target measures that allegedly burden or restrict United States commerce. 19 U.S.C. § 2411(b)(1).
89. Section 338 has therefore been impliedly repealed. At a minimum, Section 301 controls where, as here, the President seeks to respond to foreign practices within Section 301’s scope, and the President may not impose duties in response to such practices while disregarding the procedures and limits Section 301 imposes. Because the President did not proceed under Section 301, the Section 338 Tariffs are unlawful whether or not Section 338 survives.
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When I first heard this kind of claim talked about as a possibility, I was skeptical, but maybe there's something more here than I realized.
Count II: The Section 338 Action exceeds the authority granted by Section 338 of the Tariff Act of 1930.
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95. None of the Canadian measures identified in the Section 338 Proclamations constitutes discrimination within the meaning of Section 338. Canada’s motor vehicle surtax and its provinces’ alcohol purchasing decisions are responses to tariffs that the United States imposed on Canada, not discrimination by Canada against the United States. And Canada’s dairy TRQ administration treats U.S. cheese better than the cheese of most of the world; that Canada grants the European Union a different preference under a different reciprocal agreement, while giving the United States the TRQ terms the United States itself negotiated and Congress approved, is not discrimination against the United States. Nor is it “unreasonable”: preferences granted under reciprocal trade agreements are a routine feature of trade law, including that of the United States, and a USMCA panel found Canada’s rule “not inconsistent with” the USMCA.
One concern I have with this claim is that while it's true that the Canadian provinces’ alcohol purchasing decisions "are responses to tariffs that the United States imposed," does that necessarily mean they do not constitute discrimination? There's going to have to be a big discussion of what "discrimination" means.
Similarly, yes, the Canadian preferences to EU cheese are part of a reciprocal agreement, but does that mean it's not "discrimination" for the purposes of Section 338? The complaint says: "When Congress enacted Section 338, a preference granted under a reciprocal agreement was not 'discrimination.' The same Act expressly preserved the United States’ own exclusive preference for Cuba." I have no doubt it's true that Congress believed it could still discriminate through tariff preferences, but I'm not sure that meant it was OK with other governments giving such preferences (see the discussion of reciprocity treaties here).
The complaint also raises the issue of whether the Section 338 tariffs properly "offset" the discrimination:
96. Even where its predicates are satisfied, Section 338 authorizes only duties that the President “determine[s] will offset” the burden or disadvantage caused by the foreign country’s discrimination. 19 U.S.C. § 1338(d). Whatever products the President chooses to tax, the duty must balance the burden the discrimination places on United States commerce.
97. The Section 338 Tariffs do not. Each proclamation imposes the statutory maximum rate of 50 percent without tying it to any measured burden: the Alcohol and Motor Vehicles Proclamations recite very different export declines, the Dairy Proclamation quantifies none, and all three impose the same rate. Each states that the duties will “expand opportunities for U.S. producers” and “may spur Canada to remove” the challenged measure, which describes protection and leverage, not an offset. See supra ¶ 56. Proclamations 11064 and 11065 then substituted substantially different product lists while declaring that the duties “would still offset the burden or disadvantage,” and taxed Canadian cheese to “offset” Canadian liquor policies and a Canadian surtax on automobiles. Proclamation 11064 ¶ 5; Proclamation 11065 ¶ 5. They are not offsets; they are general import taxes on selected Canadian goods.
This part of the claim seems pretty strong to me.
The major questions doctrine also comes up here:
98. Defendants’ interpretation of Section 338 also presents a question of vast economic and political significance. Under Defendants’ construction, the President may impose tariffs of up to 50 percent on any products of any country that extends better treatment to any other country in any respect—including through any of the hundreds of preferential trade agreements to which the United States is not a party—or that responds to tariffs the United States has imposed on it. Section 338 contains no clear statement authorizing that power. The major questions doctrine and the canon of constitutional avoidance require Section 338 to be construed not to authorize the sweeping power Defendants claim. See West Virginia v. EPA, 597 U.S. 697, 716 (2022); Learning Res., 607 U.S. at 251.
99. The Section 338 Proclamations therefore rest on a clear misconstruction of the governing statute and constitute action outside delegated authority.
I don't have any great insights into "major questions" issues, or the "nondelegation doctrine" one below. Maybe as the briefs flesh these out I'll come up with stronger views.
Count III: If Section 338 authorizes the challenged tariffs, it violates the nondelegation doctrine.
102. The nondelegation doctrine requires Congress to supply an intelligible principle that meaningfully guides and constrains the exercise of delegated authority. See J.W. Hampton, Jr. & Co. v. United States, 276 U.S. 394, 409 (1928); Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 472–76 (2001); FCC v. Consumers’ Rsch., 606 U.S. 656, 673 (2025).
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103. Section 338 authorizes action only upon a factual finding of discrimination against United States commerce relative to the commerce of other foreign countries and only through duties calibrated to “offset” the resulting burden or disadvantage. 19 U.S.C. § 1338(a), (d).
104. Defendants’ asserted construction of Section 338 eliminates those potential limiting principles. Under that construction, the President may select any products of a foreign country, and tax them at any rate up to 50 percent, without any calculation of the burden to be offset—and may then exclude those products from the United States entirely. And he may do so based on measures that the foreign country adopted in response to tariffs the President himself imposed
Count IV: The collection of Section 338 Tariffs on articles first enumerated in Proclamations 11064 and 11065 violated Section 338’s 30-day waiting period.
110. Section 338 provides that “thirty days after the date of such proclamation there shall be levied, collected, and paid upon the articles enumerated in such proclamation” the new or additional duties. 19 U.S.C. § 1338(d). Section 338 does not authorize the collection of a duty on any article before 30 days have passed from the date of the proclamation that enumerates it.
111. The President observed that requirement in the original Section 338 Proclamations, which issued on July 20, 2026, and were scheduled to take effect on August 19, 2026.
112. Proclamations 11064 and 11065, issued on September 8, 2026, enumerated articles not previously subject to the Section 338 Tariffs, including Canadian cheeses Gellert imports, and directed that duties on those articles be collected beginning September 15, 2026—only seven days later. CBP collected Section 338 Tariffs on those articles, including from Gellert, on entries made on or after September 15, 2026, and before October 8, 2026. Gellert paid more than $381,000 in Section 338 Tariffs on such entries, and it paid no Section 338 Tariffs on its Canadian cheeses before September 15, 2026.
This claim seems like a strong one, but the remedy would likely be just to impose the tariffs in question again after the required waiting period.