On October 20, 2026, Gellert Global Group Corp. (Gellert) filed a complaint in in the U.S. Court of International Trade (CIT) challenging the 50% ad valorem tariffs placed on Canadian products by President Donald Trump under Section 338 of the Tariff Act of 1930, 19 U.S.C. § 1338. The complaint seeks class action status for all importers of record that have paid, or will pay, Section 338 duties on entries made on or after August 22, 2026.
Section 338 is a provision of the Tariff Act of 1930, commonly known as the Smoot-Hawley Tariff Act. Until July 2026, no president had used it to impose tariffs in the nearly 100 years since its enactment. In the complaint, Gellert argues that the Trump administration’s use of it is the “latest attempt” to use, “through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress.” This complaint is the first court challenge of Section 338.
Link to Background Background
Gellert argues that these Section 338 tariffs are the latest effort to implement tariffs after earlier ones failed. The U.S. Supreme Court invalidated the International Emergency Economic Powers Act (IEEPA) tariffs in Learning Resources v. Trump in early 2026. The CIT then held the replacement tariffs implemented under Section 122 of the Trade Act of 1974 unlawful in Oregon v. United States, and that decision remains on appeal. And recently, several plaintiffs have challenged before the CIT the Trump administration’s Section 301 tariffs on imported goods produced with forced labor.
On July 20, 2026, President Trump issued three proclamations imposing additional tariffs on Canada to “offset Canadian discrimination against the commerce of the United States” as to alcoholic beverages, dairy and motor vehicles. Each proclamation imposed a 50% duty. These additional tariffs took effect on August 22, 2026. See SmarTrade Updates of July 21, 2026 and August 25, 2026. In September 2026, President Trump issued further proclamations that modified the list of Canadian products subject to these duties and excluded others altogether from importation into the United States. See SmarTrade Update of September 10, 2026. Among the products impacted were nearly all Canadian cheese products. The complaint states that plaintiff Gellert imported about $71 million of Canadian cheese in 2025, and those imports were historically duty-free under the United States – Mexico – Canada Agreement (USMCA). Gellert alleges that it will suffer injury by paying approximately $40 million a year in Section 338 duties. Gellert also alleges reduced margins, pressure on its working capital, delays in hiring and investment, and a potential loss of customers and long-standing supplier relationships.
Link to Discussion on Section 338 and Presidential Proclamations Discussion on Section 338 and Presidential Proclamations
In its complaint, Gellert details the text and intent of Section 338, noting that, beginning in 1934, “Congress abandoned the Smoot-Hawley model and repeatedly rebuilt the statutory framework governing the President’s authority to respond to foreign trade practices.” Gellert lists and discusses several legislative and reciprocal trade agreements used to address alleged discrimination against commerce of the United States.
Gellert in its complaint further addresses President Trump’s Section 338 proclamations, arguing that some of the alleged Canadian “discrimination” is the result of President Trump implementing: (i) IEEPA tariffs, (ii) Section 232 tariffs on Canadian motor vehicles, and (iii) separately that tariff-rate quotas for cheese were agreed upon under the USMCA.
Notably, Gellert in its complaint notes that the alcohol proclamation was used to add nearly every category of Canadian cheese in the tariff schedule to the products subject to the alcohol proclamation’s duties; that the motor vehicle proclamation was used to add cheese classified in Harmonized Tariff Schedule of the United States (HTSUS) subheading 0406.90.99 to the products subject to the motor vehicles proclamation’s duties; and that the dairy proclamation, “the only one directed at a Canadian policy concerning cheese, does not reach cheese at all.”
Link to Class Allegations Class Allegations
Gellert has brought this action on behalf of itself and others that have paid, or will pay, duties imposed under Section 338 for Canadian products entered for consumption, or withdrawn from warehouse for consumption, in the United States on or after August 22, 2026. There are two proposed classes for which the complaint seeks certification:
- All importers of record that have paid, or will pay, Section 338 duties on entries made on or after August 22, 2026.
- Importers that paid duties on goods first listed in the September 2026 proclamations and entered between September 15 and October 8, 2026 (defined as the “30-Day Subclass”).
The complaint argues that plaintiff Gellert’s claims are typical of the claims of the class. Like all proposed class members, “Plaintiff has paid and will continue to pay unlawful duties imposed under the same proclamations, and its claims arise from the same course of conduct and legal theories. Plaintiff seeks the same declaratory, injunctive, and refund relief as the Class.”
Link to The Complaint’s Four Claims The Complaint’s Four Claims
Count I: Section 338 has been “impliedly repealed” or at least is controlled by Section 301 of the Trade Act of 1974. Gellert argues that Congress abandoned Smoot-Hawley’s “retaliation-based tariff policy” starting in 1934 and that Section 301 then became a complete framework for responding to a foreign country’s trade discrimination. That framework requires investigation, consultation, public comment, action equivalent in value to the burden, and periodic review.
Count II: The imposed tariffs exceed the authority granted by Section 338. This count covers two arguments: (1) that there has been no Canadian discrimination because Canada’s alcohol and auto measures were its responses to U.S. tariffs, “retaliation is not discrimination”, and the dairy rate-quota terms were negotiated by the United States in the USMCA and approved by Congress.; and (2) that Section 338 authorizes only duties to offset the burden or disadvantage caused by a foreign country’s trade discrimination and that these tariffs do not do so because all three proclamations (alcohol, motor vehicles and dairy) apply the same 50% duty rate even though they reference very different export losses. This count also invokes the major questions doctrine.
Count III: If Section 338 does authorize the tariffs, it violates the “nondelegation doctrine.” Gellert argues that the government’s reading of Section 338 would allow the President to select any products of a foreign country, tax them at any rate up to 50% without measuring any burden to be offset, and then ban them outright. Gellert argues that such a reading leaves “no intelligible principle” constraining the exercise of Congress’s power to lay duties and “would convert a narrow, fact-dependent provision into an effectively unrestricted delegation of Congress’s tariff power” resulting in an unconstitutional delegation of legislative power.
Count IV: The collection of duties first listed in the September 2026 proclamation violates Section 338’s 30-day waiting period. Gellert argues that Section 338 allows duties to be collected only “thirty days after the date of” the proclamation that lists the goods; however, the September proclamations started collection on September 15, 2026, seven days later.
The plaintiff Gellert asks that the CIT declare the Section 338 tariffs unlawful, enjoin their enforcement and collection, and order the federal government defendants to refund, with interest, the duties unlawfully collected.