WASHINGTON (AP) — A New Jersey food importer filed a lawsuit Tuesday challenging President Donald Trump's power to invoke a Depression-era law to levy a 50% tariff on $20 billion worth of Canadian goods.
The Gellert Global Group, a third-generation family business that imports Canadian cheese, took its case to the U.S. Court of International Trade, a specialized court in New York.
In August, Trump reached back to Section 338 of the Tariff Act of 1930 to impose the tariffs on Canada, prompting dollar-for-dollar retaliation from Ottawa and straining already-tense relations between the neighbors and longtime allies. The president last month escalated the conflict by announcing an outright ban on nearly $1 billion worth of Canadian products, including alcoholic beverages, dairy products and motorcycles.
The president’s Section 338 tariff authority had never been used in a trade dispute, let alone tested in court.
"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, chair of the Liberty Justice Center, a libertarian advocacy group that is representing the Gellert firm and which successfully challenged previous Trump tariffs before the Supreme Court earlier this year.
The White House said the administration would vigorously defend Trump’s tariffs on Canadian imports and considers Section 338 appropriate to counter what the administration considers Canadian discrimination against American dairy, alcohol and auto exports.
Since returning to the White House last year, Trump has sought to build a wall of protective tariffs — import taxes — around the U.S. economy. The centerpiece of the policy originally was his use of a 1977 law to declare America's longstanding trade deficits a national emergency, justifying double-digit tariffs on almost every country. But the Supreme Court struck down those tariffs in February, and the Trump administration was forced to refund billions of dollars to the importers that paid them.
Trump has since looked for other legal authority to tax imports. In July, for example, he hit dozens of U.S. trading partners with tariffs of 10% to 12.5%, charging that they had not done enough to crack down on imports produced by forced labor. Those tariffs are also being challenged in court.
Then he invoked Section 338 to sanction Canada for allegedly discriminating against U.S. dairy, auto and alcoholic beverages.
As Section 338 sat on the books unused for decades, Congress passed new trade laws. Some of them ceded to the president tariff power, which the Constitution originally granted to Congress. But the new laws also limited the president’s authority to certain circumstances — including dealing with national security threats and foreign currency crises — and required the government to carry out investigations and meet other procedural requirements beforehand.
The Liberty Justice Center argues that the newer trade legislation superseded the president's Section 338 tariff authority and rendered it obsolete.
