Lawsuit challenges Trump's 50% tariffs on Canadian goods, seeks refunds

Key Facts

The Liberty Justice Center filed a lawsuit in the U.S. Court of International Trade challenging tariffs imposed by President Donald Trump's administration on Canadian goods, seeking to invalidate them and halt their collection. The center said the plaintiff, Gellert Global Group, pays 50% tariffs on Canadian cheese it imports into the United States. The group is a family-owned U.S. food company, and the lawsuit also represents a proposed class of importers on whose behalf it seeks tariff refunds. Its demands include repayment with interest, making the money paid by importing companies a direct part of the litigation. The case targets additional tariffs that took effect on August 22, 2026, after a temporary suspension expired, according to an official White House announcement.

Outlining the tariffs' impact on the company's business, the plaintiff said the dispute affects a dairy supply chain that crosses the U.S.-Canada border before the product reaches its American customers. A Canadian supplier buys milk from dairy farmers in northern New York state, then uses it to make Brie cheese in Canada. After production, the supplier ships the cheese back to customers in the United States, where Gellert pays the tariff on the Canadian cheese it imports, according to the case page. In the other direction, the plaintiff said Canadian retaliatory measures affect American cheese sold by the group's Canadian subsidiary. The operations the company presented to the court thus encompass purchases from American farmers, Canadian manufacturing and cheese sales on both sides of the border.

The Office of the U.S. Trade Representative had announced that the measures target imports from Canada worth about $20 billion, the value it specified when the tariffs were originally announced. The U.S. administration justified the move by citing Canadian practices concerning access for U.S. exports to the Canadian market, according to the office's statement on imposing the measures. The sectors named in the statement included automobiles, alcoholic beverages and dairy products, placing dairy trade among the stated reasons for the U.S. decision. The cheese Gellert imports therefore falls within a sector also featured in the trade complaints the administration cited to justify its action. The two positions present two sides of the same dispute: Washington's objection to the treatment of its exports in Canada, and the American importer's objection to tariffs on its purchases from that country.

The original White House fact sheet made clear that meeting the rules of origin under the United States-Mexico-Canada Agreement does not exempt covered goods from these tariffs. The White House said they apply "regardless of whether the good qualifies as originating under the United States-Mexico-Canada Agreement." This includes products listed under the measures even when their origin qualifies under the trade agreement, according to the scope announced by the U.S. administration. By contrast, the original announcement exempted energy and potash from the tariffs, specifying sectoral exemptions alongside the rule for covered goods. The decision thus subjected listed products to tariffs despite their compliance with rules of origin, while excluding energy and potash from its scope at the time of the announcement.

The administration later amended the lists of goods as part of its response to Canadian retaliatory measures, according to another White House fact sheet. It removed products including rock salt and cement from the lists while adding other products to the scope of the trade measures imposed on Canada. The additions included off-road vehicles and additional dairy products, changing the composition of the targeted goods after the original tariff announcement. The White House also set September 29, 2026, as the effective date for a ban on imports of certain Canadian goods as part of an escalation of the measures. These changes followed the implementation of the additional tariffs in August, extending the U.S. approach from collecting tariffs to revising the lists and banning specific imports.

The legal challenge puts before the courts a tariff authority under Section 338 that the Associated Press described as previously unused and untested in court. In its earlier coverage of the lawsuit, the agency said the authority had "never been used, let alone tested in court," making the case a test of a path lacking legal precedent. As for the next steps, the plaintiff has filed a motion for a preliminary injunction to prevent tariff collection, alongside a motion for summary judgment in the company's favor. The proceedings distinguish between the request for preliminary intervention to halt collection and the broader demands for a declaration that the tariffs are unlawful and repayment with interest. The company is asking the U.S. Court of International Trade to consider these requests as it seeks to halt collection and recover the money importers have paid.