Caption: President Donald Trump comments on the Supreme Court decision that overturned his first round of global tariffs, leading to the imposition of new tariffs against Canada under Section 338 of the Tariff Act of 1930.
By Gary Symons
TLL Editor-in-Chief
A newly filed lawsuit could overturn 50% tariffs imposed by the Trump administration on Canadian goods.
The suit was filed in the U.S. Court of International Trade by the Liberty Justice Center, on behalf of Gellert Global Group, a third-generation, family-owned American food business.
If successful, the lawsuit could result in a reversal of the tariffs, undermining one of the Trump administration’s signature policies. It could also result in a court order requiring tariff refunds for Gellert Global Group and other American food importers.
The Liberty Justice Center is specifically challenging the administration’s use of Section 338 of the Tariff Act of 1930 to impose 50 percent tariffs on certain Canadian goods. The plaintiffs argue that the administration exceeded its statutory authority, causing harm to American businesses, their suppliers, and customers.
The Liberty Justice Center notes that no president has ever used Section 338 to impose tariffs until this year. The statute is specifically aimed at addressing foreign discrimination against U.S. commerce. The Liberty Justice Center argues that it is not an all-purpose authorization for the executive branch to impose sweeping tariffs or import restrictions whenever a trade dispute arises.
“This case is not about the president; it is about the presidency,” said Sara Albrecht, chairman and CEO of the Liberty Justice Center. “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.”
The tariffs on Canada were levied after the U.S. Supreme Court ruled against the White House in a case that struck down the sweeping global tariffs imposed in 2025. In a 6-3 decision, the court ordered refunds of some 2025 tariff collections to businesses, prompting Trump to announce a temporary 10% global tariff under a different legal basis.
Trump later announced much higher tariffs on Canada under Section 338, alleging the country was discriminating against American exports.
However, the plaintiffs argue Trump’s use of Section 338 is illegal, saying it allows tariffs only to offset foreign discrimination against U.S. commerce. The lawsuit argues that Canadian policies identified by the administration do not justify the sweeping tariffs imposed. Two of the measures arose in response to the president’s own tariffs, while the third involves Canadian dairy policies governed by the existing U.S.-Mexico-Canada Agreement (USMCA).
Ironically, the USMCA was negotiated by the Trump administration during Trump’s first term.
The lawsuit also argues that Congress superseded Section 338 with Section 301 of the Trade Act of 1974, which established procedures and safeguards for addressing unfair foreign trade practices.
“Congress already gave the executive branch a tool for responding to unfair foreign trade practices: Section 301, which requires an investigation, public comment, and other safeguards,” said Jeffrey M. Schwab, senior counsel and director of litigation at the Liberty Justice Center. “The administration cannot skip those protections by reaching for a 1930 statute that no president had ever used to impose a tariff.”
Peter Cross, vice president of strategic partnerships at Broad Street Licensing Group, says a ruling in favour of Gellert Global could lead to benefits for the food industry and the associated food and beverage licensing category.
“In theory, rescinding the tariffs would mean a lowering of food and beverage costs for manufacturers and retailers, especially those that import from Canada,” Cross said.
How that benefit applies to the industry, however, depends on how producers and retailers choose to adapt. In many cases, food retailers worked to keep prices from rising to avoid losing sales and market share. However, when food prices rose due to tariffs in 2025, they did not fall after the courts ruled against the original tariffs in 2026.
Cross says lowering prices could increase grocery purchases, but it’s hard to say whether retailers and producers are willing to drop prices.
“When the price of groceries goes down, consumers have increased confidence to buy more,” Cross explained. “However, the challenge is whether retailers would actually bring the prices down or keep them at or near where they currently are.
“For example, during the bird flu outbreak last year, many retailers raised egg prices even for manufacturers that weren’t affected.”
Cross argues that in the long term, giving consumers a break will provide a bigger benefit to the food and beverage industry by promoting higher unit sales and encouraging purchases of premium, branded products.
“Consumer confidence is what ultimately drives food and beverage licensing, especially at the grocery level,” he said. “If consumer confidence is low, fewer retailers add licensed products as they are value-added products.”
Gellert Global Group is a good example of a company affected by the tariffs. The company says the effects on its business extend beyond higher import costs. The company pays a 50 per cent tariff on Canadian cheeses it imports, while Canada’s retaliatory tariffs hit American-made cheeses that its Canadian division sells in Canada.
Gellert also says some of those relationships see goods crossing the border more than once.
For example, one of Gellert’s Canadian cheese suppliers purchases milk from dairy farmers in upstate New York, processes it into brie in Canada, and then ships the finished cheese back to the U.S.
The tariffs hit American farmers and businesses on both sides of that transaction.
“Gellert Global Group has spent generations building trusted relationships with suppliers, customers, and partners across the food industry,” said Thomas Gellert, co-CEO of Gellert Global Group. “These tariffs disrupt those relationships overnight and create costs and uncertainty that ripple through the entire supply chain.”
The Liberty Justice Center says that while this case focuses on the tariffs imposed against Canada, the goal of the lawsuit is to establish a precedent that Section 338 cannot become a standing tool for presidents of either party to impose tariffs or import restrictions on other trading partners without congressional authority.
“We have challenged these tariffs under IEEPA, Section 122, Section 301, and now Section 338 for the same reason: the Constitution gives tariff power to Congress,” Albrecht said.
“The executive branch cannot keep moving the same policy from one statute to another and pretend the limits disappear.”
The lawsuit asks the court to declare the tariffs unlawful, block their collection, and order refunds, with interest, to the importers who paid them.
Cross says a victory would provide both a short-term and long-term benefit for the food and beverage industry. Over the long term, such a ruling would prevent the White House from unilaterally imposing tariffs, providing more certainty and stability for the sector.
In the short term, Cross notes that importers could also receive sizeable rebates. Those funds, he said, would likely remain in the hands of importers and retailers, as providing refunds to millions of consumers would be extremely difficult.
“I’m sure the top executives of importer companies may receive rebates, but consumers won’t feel those rebates,” Cross said. “The prices will most likely remain where they are until there is a larger effort by a new administration to bring overall prices down.”
However, in the long term, Cross says a reduction or elimination of tariffs would benefit the entire U.S. industry, including the licensing sector.
“The industry benefits from lower grocery prices overall,” Cross said. “As mentioned above, when times get tight, so do consumers’ wallets.
“Licensing world-class brands is a strategic approach that food and beverage manufacturers utilize, but when times get tough, most manufacturers hold onto their current product lines so as to not waste internal resources.”
One example of the impact of the current inflationary spiral driven by tariffs and high diesel prices can be seen in the decline in sales volume for premium brands and licensed products.
Market research firm Circana said in its most recent report that the food and beverage industry will experience a significant slowdown in 2027 as consumers react to inflationary pressures.
Circana said U.S. consumers are shifting away from simply cutting back on spending and are instead becoming more selective about how they shop. The findings showed the U.S. retail food and beverage industry grew 2.2% in the first half of 2026. However, that growth in revenue was primarily due to inflation, as sales volumes remained flat.
Circana also noted that inflation poses a threat to premium brands, as consumers are increasingly shifting to less expensive private-label products.
“Whether through pack-size optimization, private label and brand selection, AI-assisted shopping, or reducing waste, shoppers are finding smarter ways to achieve the outcomes they want while navigating persistent financial pressures,” the research firm said.
Cross says anything that reduces those pressures on consumers will help the food and beverage licensing sector.
“In tough economic times, everyone is hoping to keep their jobs,” he said. “For the most part, licensing isn’t their ‘bread and butter’ and is easily scrapped to focus on core offerings.”
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