Non-profit organization Liberty Justice Center, on behalf of US food importer Gellert Global Group, initiated a lawsuit on Tuesday against US President Donald Trump’s administration’s latest tariffs on imports from Canada.

The lawsuit argues the duties represent another attempt to use a Depression-era trade statute, Section 338, to exceed his power as president and claim presidential tariff power that has previously been rejected by the US Supreme Court in February 2026.

President Trump was accused of using Section 338 to slap an array of Canadian goods (steel, aluminum, dairy, alcohol, and consumer goods) with a 50 per cent levy after trade talks between Canada and the US broke down in August. The tariffs also include a total import ban on Canadian alcoholic beverages and motorcycles.

The White House claimed Section 338 empowers the president to impose tariffs when a country puts U.S. exporters at a disadvantage relative to exporters in other countries. However, the lawsuit argues that the law has never been used for that purpose. “Section 338 is a provision of the Smoot-Hawley Tariff Act of 1930. Until July 2026, no President had used it to impose a tariff in the 96 years since its enactment.”

The lawsuit argues that the Canadian measures the White House cites do not discriminate against the United States. Two are Canada’s responses to the President’s own tariffs, including tariffs the US Supreme Court has held unlawful, and retaliation is not discrimination.

The Trump administration’s contrary reading permits the President to find “discrimination” whenever a trading partner grants any third country a preference it does not grant the United States, or responds to tariffs the President himself imposed, and then to completely ban or tax any of that country’s products at up to 50 percent without measuring any burden. The lawsuit argues courts do not presume that Congress conferred a power of that magnitude without clear authorization. If Congress conferred it, the delegation of its core Article I tariff power would be unconstitutional.

In Learning Resources, Inc. v. Trump, the US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant the President tariff-setting authority in a 6-3 decision. Instead, the Court reiterated that tariffs function as taxes, falling strictly under congressional authority per Article I, Section 8, Clause 1 of the US Constitution

Section 338 is a relic of the US Congress’ retaliation-based tariff policy that Congress abandoned four years after Smoot-Hawley became valid law, according to the lawsuit. Beginning with the Reciprocal Trade Agreements Act of 1934 and culminating in Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411 et seq., Congress built a comprehensive scheme for responding to foreign discrimination against American commerce, one that requires mandatory USTR investigations, consultation, public hearings, deadlines, action equivalent in value to the burden imposed, and periodic review built into Section 301, the lawsuit read. Section 338 has been impliedly repealed or, at a minimum, is controlled by Section 301 of the Trade Act of 1974.

The lawsuit argues that even if Section 338 survives, its powers are narrow. It permits the President to act only if they objectively and conclusively determine a foreign country imposes against United States’ products an “‘unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country’, or that it ‘[d]iscriminates against the commerce of the United States’ through customs ‘in such manner as to place the commerce of the United States at a disadvantage compared with the commerce of any foreign country.'”

Even then, the President may impose tariffs only in an amount sufficient to offset the burden or disadvantage resulting from the alleged discrimination, and by law, retaliatory tariffs are capped at 50% of the product’s value, regardless of the severity of the trade violation