A shipment of Canadian cheese has become part of a much larger fight over presidential power. Gellert Global Group, an American food importer, sued the Trump administration on October 20, 2026, seeking to stop 50% tariffs imposed on selected Canadian goods under a trade law dating to 1930.
For a business buying and selling food on both sides of the border, the dispute is already showing up in customs bills. Gellert says the duties damage established supplier relationships and increase costs. Its challenge asks the U.S. Court of International Trade to decide whether the White House stayed within the authority Congress granted—a question with consequences extending beyond one importer or one shipment.
A Family Food Business Takes on Washington
Gellert is a business with an unusually direct view of the border dispute. The Liberty Justice Center, which represents it, describes a third-generation family enterprise that imports and distributes food across the United States while helping American producers reach overseas markets. The complaint identifies its headquarters as Elizabeth, New Jersey. That combination puts the company on both sides of a political argument often framed around helping domestic businesses compete with foreign suppliers.
The costs described in the filing are already substantial. Gellert says it paid more than US$520,000 in the challenged duties between September 16 and October 11. That is a reported company expense, rather than a forecast of what tariffs might eventually cost the economy. For a food distributor, an extra customs bill must be accommodated somewhere in the business. The case gives a concrete face to that pressure: a company asking a court to change the rules under which its next shipments will arrive.
Which Canadian Goods Are Caught in the Dispute
The challenged measure is an additional 50% duty on products identified in presidential proclamations and their tariff schedules. Its reach extends beyond food to categories including furniture, clothing and recreational goods. The initial duties took effect on August 22, 2026, and September amendments changed the product lists. That evolving coverage matters: a company can be outside the measure on one shipment and face a substantial bill on the next if its product has been added.
The White House says it is responding to discriminatory Canadian policies involving U.S. alcoholic beverages, dairy products and motor vehicles. That is the administration’s stated justification; Gellert contests whether those policies satisfy the legal test. The dispute therefore requires more precision than the broad phrase tariffs on Canada. Customs classification, the particular proclamation and the date of entry help determine a shipment’s treatment. A 50% headline rate alone cannot establish the total duty owed on every Canadian product.
A 1930 Law Returns to the Spotlight
At the centre of the case is Section 338 of the Tariff Act of 1930, better known as the Smoot-Hawley tariff law. The provision authorizes additional duties when the president makes specified findings about foreign discrimination against American commerce. Its language focuses on unequal treatment that burdens U.S. goods or places U.S. commerce at a disadvantage compared with that of another country. The controversy turns on how those conditions apply to Canada’s policies today.
The statute also puts boundaries around the response. It caps the additional duty at 50% of a product’s value and directs that the rate offset the identified burden or disadvantage. If discrimination continues or increases, it permits import exclusions under further conditions. Those provisions explain why an old law can have such immediate commercial importance. They also frame the court’s task: examining the connection between the Canadian measures Washington objects to and the tariffs Washington chose to impose.
Why Gellert Says the Administration Crossed the Line
Gellert’s lawyers argue that later trade legislation changed the legal framework for responding to unfair foreign practices. They point to Section 301 of the Trade Act of 1974, which provides a process involving investigations, consultations and public participation. Their position is that the administration cannot avoid those safeguards by turning to Section 338. Whether the newer law displaced or constrains the older provision is an argument for the court to resolve, rather than an established conclusion.
The company also disputes the substance of Washington’s discrimination claim. Its complaint says Canada’s alcohol and vehicle measures were responses to U.S. tariffs, while the dairy arrangements reflect terms negotiated under the United States–Mexico–Canada Agreement. It challenges the connection between those policies and a uniform 50% response, including duties on cheese under actions concerning alcohol and vehicles. These objections ask the judges to examine both the legal route the administration used and how closely its chosen remedy matches the conduct it says caused harm.
Seven Days of Notice Become a Legal Issue
A separate dispute concerns the calendar. The administration issued amendments adding products on September 8 and made the revised duties effective September 15. Gellert argues that the seven-day interval violated Section 338’s requirement for collection to begin 30 days after the relevant proclamation. The White House’s September notice confirms the dates and also cites the president’s authority to amend earlier proclamations. The legal disagreement concerns how the waiting rule applies when new products are added.
That question could matter to importers with goods arriving during the disputed window. A purchase agreed before a tariff announcement may be difficult to unwind once production or shipping is under way, leaving a business exposed to an expense it did not anticipate. Gellert seeks relief for a proposed subgroup of importers charged on newly listed goods from September 15 through October 7. A ruling on those collections could have financial consequences even if the court addresses the broader challenge separately.
American Importers Pay the Bill at the Border
A U.S. tariff is collected from the importer bringing goods into the country. The eventual burden can be shared: a Canadian supplier might accept a lower price, an American distributor might reduce its margin, or a customer might pay more. But the initial customs payment belongs in the importer’s accounts. For illustration, a 50% additional tariff on US$100,000 of covered customs value adds US$50,000, before freight, other duties and operating expenses. That cash demand can arrive before the goods generate sales revenue.
Research provides useful context for how these costs spread. Federal Reserve Bank of New York economists estimated that nearly 90% of the burden of the broader 2025 U.S. tariffs fell on American firms and consumers, using data through November that year. Their finding does not establish the precise burden of these Canadian cheese duties. It does show why an American company has a financial reason to challenge a measure aimed at a foreign trading partner: much of the expense can remain inside the importing country.
Why Grocery Prices May Change Unevenly
The percentage on a customs notice is not a direct forecast for the supermarket shelf. Retail prices include transport, distribution and store operations as well as the imported product itself. Businesses can also absorb some additional expense in their margins or negotiate with suppliers. That means a 50% duty on a product’s customs value does not automatically produce a 50% increase in its final selling price. Different products and businesses can adjust at different speeds.
A 2026 New York Fed study of the previous year’s tariffs estimated that roughly 26% of the tariff increase passed through to consumer prices, relative to less-exposed products and holding aggregate conditions fixed. It also found that indirect effects through supply chains and domestic pricing took nine to twelve months to emerge fully. Those results cannot be converted into a reliable forecast for Canadian cheese. They do explain why a tariff’s impact can unfold gradually, with customers encountering changing prices well after the initial announcement.
A Cheese Shipment Can Support Farms on Both Sides
One detail in Gellert’s account shows how difficult it can be to separate American and Canadian interests. According to the Liberty Justice Center, a Canadian supplier buys milk from dairy farms in upstate New York, turns it into brie in Canada and ships the finished cheese back to the United States. The product reaches customs as a Canadian import, but an American farmer helped produce it. Disrupting that route could therefore affect demand for an American agricultural product as well as a Canadian manufacturer’s sales.
The wider relationship is substantial. Agriculture and Agri-Food Canada reports that bilateral agri-food and seafood trade reached C$100.2 billion in 2025, consisting of C$61.4 billion in Canadian exports to the United States and C$38.8 billion moving the other way. Those figures cover the entire sector relationship, rather than just products subject to the disputed tariff. They help explain why the effects can spread across borders: farms, processors and distributors have commercial ties that extend well beyond the nationality printed on a finished package.
Canada’s Response Adds Another Layer of Costs
Ottawa has imposed costs on trade moving in the opposite direction. Canada announced counter-tariffs of 15%, 25% and 50%, effective September 8, on specified American goods covering C$27.6 billion in imports. The targeted sectors included dairy, steel, appliances and agricultural equipment. That dollar figure describes the value of covered trade, rather than the amount of tariff revenue collected. The response widened the commercial consequences of a dispute that was already affecting Canadian sales into the American market.
Canada’s own regulatory analysis acknowledges that its countermeasures can increase costs for Canadian businesses and that some or all of those costs may reach downstream customers. Gellert’s lawyers say the company encounters this side of the dispute too: Canadian retaliation affects American-made cheeses sold by its Canadian division. A business trading in both directions can therefore face pressure in both markets. The lawsuit seeks relief from U.S. duties; removing Canadian countermeasures would require separate action under Canada’s own rules.
An Earlier Supreme Court Ruling Shapes the Backdrop
The administration has already lost a major tariff case this year. On February 20, 2026, the Supreme Court held in Learning Resources v. Trump that the International Emergency Economic Powers Act did not authorize the president to impose tariffs. That judgment concerned the emergency-powers law used for earlier measures. It reinforced the importance of the authority Congress actually granted, while leaving tariffs imposed under other statutes to be assessed under their own legal requirements.
Section 338 presents a different question because its text expressly discusses additional duties and a 50% ceiling. The dispute now centres on the boundaries of that authority and whether the administration complied with them. Gellert also argues that an interpretation giving the president the breadth of power claimed would improperly delegate Congress’s legislative authority. The earlier Supreme Court decision provides an important backdrop, but it does not determine this lawsuit’s outcome. For businesses hoping for relief, the wording of the particular law—and the court’s interpretation of it—remains decisive.
What a Court Decision Could Change
Gellert is asking the court to declare the challenged tariffs unlawful, stop their enforcement and order refunds with applicable interest. It also seeks to represent other affected importers through a proposed class action. The Liberty Justice Center says it filed requests for a preliminary injunction and summary judgment alongside the complaint on October 20. Those requests require judicial decisions. Counsel’s case page lists the matter as pending, so the filing should not be mistaken for an order already lifting the duties.
A preliminary injunction could pause collection while the case proceeds, depending on the terms of any order. A final judgment would address the legal claims and the relief the court grants. For businesses, the practical significance would lie in those details: which imports are covered, when collection changes and whether previously paid duties are returned. For the people moving milk, making cheese and supplying stores, a decision could turn a dispute over a 1930 statute into a concrete change in the cost of doing business.
