Importer sues over $40M in cheese duties under 1930 tariff law

Section 338 is the fourth legal authority the administration has used to impose broad tariffs in two years. The U.S. Supreme Court struck down the first in February, in Learning Resources v. Trump, ruling the International Emergency Economic Powers Act does not authorize tariffs.

The Court of International Trade found the second, a 10% surcharge under Section 122, unlawful in May in Oregon v. United States, now on appeal. A challenge to the third, Section 301 tariffs covering nearly all U.S. imports, is pending before the same court.

The government refunded $144.6 billion in customs duties to importers in fiscal 2026, nearly all of it after the Supreme Court struck down the IEEPA tariffs in February, according to the Treasury Department’s monthly statement.

The new lawsuit also says the government collected the duties early. Section 338 bars collection until 30 days after the proclamation listing a product, a limit the White House described in its own July proclamation, writing that the law authorizes duties “not to take effect earlier than 30 days after the President’s proclamation.”

When the president added Canadian cheeses to the tariff lists Sept. 8, he directed collection to begin Sept. 15, seven days later. Gellert Global paid more than $381,000 during that window, according to the complaint.

The administration has not said whether it considers the waiting period to restart when products are added to an existing tariff list. Section 338 also lets the president “supplement, or amend” a proclamation, and the lawsuit argues that power does not let him skip the 30-day wait for newly listed goods.

The Tax Foundation estimates the Section 338 duties cover about $16.1 billion in Canadian imports a year. Canada retaliated with counter-tariffs on about $20 billion in U.S. goods, effective Sept. 8.

Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center, which represents Gellert Global, said the group asked the court to move quickly and hopes for a hearing within about 30 days. He said the waiting period claim could be resolved on its own, and that the proposed class could include “hundreds, potentially thousands, of American importers.”

“The court could find those collections unlawful and order refunds for the affected importers without resolving the broader constitutional questions,” he told The Center Square. “But that would address only a portion of the harm.”

Phillip Magness, a senior fellow at the Independent Institute, told The Center Square in August that the statute’s novelty made a court challenge likely and risked another refund order. He said Section 338 fell dormant for a reason. The United States joined the General Agreement on Tariffs and Trade in 1947, and Congress rewrote U.S. trade law in 1962 and 1974 with detailed procedures for imposing retaliatory tariffs, he said.

“The cumulative effect is that Section 338 became obsolete and superseded by later trade agreements and revisions to the US statutes,” he said.

The Independent Institute, which advocates for free markets and limited government, has filed friend-of-the-court briefs opposing the administration’s tariffs in earlier cases, including one brought by the Liberty Justice Center.

Not everyone sees the statute as obsolete. The Coalition for a Prosperous America, which advocates for higher tariffs on behalf of domestic producers, recommended the administration use Section 338 in a March 2025 paper. When the administration applied Section 338 duties to Canadian aluminum extrusions in September 2026, coalition President Jon Toomey said the Office of the U.S. Trade Representative “listened” and credited it with protecting American fabricators.

Gellert Global, a third-generation family business headquartered in Elizabeth, New Jersey, imported about $71 million in Canadian cheese in 2025, all of it entering duty-free under the U.S.-Mexico-Canada Agreement before the new duties took effect, according to the complaint. The company projects about $80 million in imports over the coming year, which at the 50% rate would mean about $40 million in duties, according to the complaint and Liberty Justice Center spokesman Neil Strauss. The company is absorbing the cost rather than raising prices through the end of 2026.

“It is an investment by our company to ensure that products stay on shelf, stay in distribution,” Thomas Gellert, the company’s co-chief executive, told The Center Square. “The people in our company have worked very hard – for decades – to build distribution across many channels for these products, and once you are off the shelf, it is very hard to get back on.”

Some of that cheese starts on American farms. One of the company’s Ontario suppliers buys cow’s milk from dairies in upstate New York, turns it into brie and ships it back across the border, according to the complaint. The 50% duty applies on return.

A White House spokesperson said Congress empowered the president under Section 338 to offset the burden of foreign discrimination against U.S. commerce, including what the administration calls Canada’s continued discrimination against American dairy, alcohol and auto exports. The lawsuit “will not deter President Trump’s commitment to level the playing field for American workers, farmers, and firms, and the Administration will defend vigorously the President’s actions in court,” the spokesperson said.

The Office of the U.S. Trade Representative referred questions to the White House. Neither answered why the administration used Section 338 rather than Section 301, how the 50% rate was calculated against the burden each proclamation identified, whether retaliation counts as discrimination under the statute, or how the Sept. 15 collection date squared with the 30-day requirement.

Asked what would stop a fifth authority if this one falls, Schwab said the law would.

“We’ve never been anti-tariff,” he said. “Tariffs can serve a legitimate purpose when they’re targeted and used within the law. But the Constitution gives Congress – not the president – the power to set tariff policy. If Congress wants to authorize these tariffs, it can do its job.”