The Section 338 Tariffs Case
A Depression-Era Law Is Not a Blank Check
The Liberty Justice Center is challenging the Trump administration’s use of Section 338 of the Tariff Act of 1930 to impose sweeping 50% tariffs on Canadian goods, threatening American businesses, raising costs, and disrupting supply chains. The case argues that this never-before-used tariff provision does not give the president unchecked power to impose tariffs—an authority the Constitution assigns to Congress. We are fighting to ensure that no president can use an obscure statute to claim virtually unlimited authority over American trade.
Our goal
Defending the Constitution. Protecting American Businesses.
After successfully challenging the administration’s tariffs under the International Emergency Economic Powers Act (IEEPA), and bringing additional challenges under Sections 122 and 301 of the Trade Act of 1974, we are confronting the administration’s latest attempt to impose sweeping tariffs without complying with the law.
This case is not about the president. It is about the presidency. No president, regardless of political party, should be able to resurrect a dormant law, disregard its requirements, and use it to impose enormous new taxes on American businesses.
Our goal is to stop these unlawful tariffs, secure refunds of unlawfully collected duties, and preserve the separation of powers for future administrations.
Our Case
Gellert Global Group v. Trump
The Liberty Justice Center is challenging the administration’s decision to impose 50% tariffs on Canadian products under Section 338 of the Tariff Act of 1930.
Section 338 authorizes limited trade remedies in response to specific discrimination against American commerce. It does not give the president unrestricted power to impose tariffs whenever a trade dispute arises.
Our lawsuit argues that the administration exceeded the statute’s authority, failed to satisfy its requirements, and attempted to bypass the more comprehensive trade-enforcement framework Congress subsequently established.
The administration also disregarded an explicit statutory deadline. Section 338 requires a 30-day waiting period before duties may be collected on newly enumerated products. Instead, the administration began collecting tariffs just seven days after adding hundreds of products.
The Liberty Justice Center is seeking to halt the unlawful tariffs and recover duties already collected, with applicable interest. We are also asking the court to certify a nationwide class of affected importers and a separate subclass of businesses subjected to tariffs before the statutory waiting period expired.
why it matters
The Constitutional Problem with the Section 338 Tariffs
The Constitution gives Congress the power to regulate foreign commerce and impose tariffs. Congress can delegate some of that authority to the president, but those delegations have limits.
Section 338 was enacted in 1930 to address specific discriminatory treatment of American commerce by foreign governments. It was not designed to give presidents open-ended authority to impose punitive tariffs on whatever products they choose. Yet the administration has imposed the maximum 50% tariff on Canadian products, including cheese subjected to duties supposedly addressing disputes over Canadian liquor policies and automobile tariffs.
The consequences reach far beyond a single trade dispute.
Threat to American Businesses
A 50% tariff is an enormous additional cost for American companies that rely on imported products, materials, and established international suppliers. These tariffs reduce margins, consume working capital, discourage investment, and make it harder for businesses to plan for the future.
Threat to American Farmers and Consumers
Modern North American supply chains frequently cross borders. American farmers may supply raw materials used to produce food in Canada that is then sold in the United States. Tariffs on those finished products can harm businesses and farmers on both sides of the border and ultimately increase costs for American consumers.
Threat to the Constitution
If Section 338 can be used to impose sweeping tariffs without meaningful statutory limits, future presidents of either party could invoke the same authority against nearly any trading partner. Congress’s constitutional power over tariffs cannot be replaced by unilateral presidential discretion.
about section 338
A Nearly Century-Old Law That Was Never Used This Way
Section 338 authorizes limited remedies for discrimination against American commerce. It does not give the president unchecked tariff authority.
What is Section 338?
Section 338 is part of the Tariff Act of 1930, commonly known as the Smoot-Hawley Tariff Act. It substantially reenacted a provision first adopted in 1922 and was intended to address discriminatory treatment of American commerce by foreign governments.
Under Section 338, the president may impose additional duties of up to 50% when specified statutory conditions are satisfied.
But the law imposes important restrictions. It requires findings of discrimination against American commerce and authorizes duties intended to offset the identified burden or disadvantage. It also specifies when those duties may begin.
Section 338 is a limited trade remedy, not a general authorization to use tariffs as political or economic leverage.
Why Has Section 338 Been Dormant for Nearly a Century?
Although Section 338 and its predecessor were historically considered in trade investigations and diplomatic negotiations, neither was directly used to impose the penalty tariffs authorized by the statute.
A 1979 U.S. International Trade Commission report described Section 338 as “an obscure and never-used provision of the law” that had been “overshadowed by more recent enactments.”
One of those enactments was Section 301 of the Trade Act of 1974, through which Congress established a more detailed system for investigating and responding to unfair foreign trade practices.
Our lawsuit argues that the administration cannot bypass that modern framework simply by reaching back to a dormant Depression-era statute.
Smoot-Hawley. Anyone? Anyone?
Remember the famous economics class in Ferris Bueller’s Day Off?
In the 1986 film, Ben Stein’s character gives a painfully dull lesson about the Smoot-Hawley Tariff Act of 1930, the Depression-era law that raised tariffs on imported goods. Nearly a century later, that same law is at the center of a new constitutional battle.
The Trump administration has invoked Section 338 of Smoot-Hawley—a provision never previously used to impose its authorized penalty tariffs—to impose sweeping 50% duties on Canadian products.
The lesson from history? Congress’s power over tariffs matters. Anyone? Anyone?
Our Arguments
Section 338 Is a Limited Trade Remedy—Not Unlimited Presidential Tariff Authority
Our lawsuit challenges the administration’s tariffs on five grounds, arguing that they exceed the law’s limits, disregard required safeguards, and undermine Congress’s constitutional authority over trade.
Our lawsuit argues five core points:
Section 338 Requires Actual Discrimination Against American Commerce
Section 338 is directed at specific discriminatory treatment of American commerce by foreign countries.
The administration cannot invoke the statute merely because it disagrees with Canada’s trade policies or wants additional negotiating leverage. It must establish that the challenged foreign practices satisfy the statutory requirements.
Our lawsuit argues that the administration has failed to establish the discrimination necessary to justify these sweeping tariffs.
The Tariffs Must Be Tied to the Burden They Are Supposed to Offset
Section 338 permits additional duties that the president determines will offset the burden or disadvantage caused by the identified discrimination.
But the administration imposed the maximum 50% tariff without adequately explaining how that rate corresponds to the alleged harm.
In a particularly striking example, the administration subjected Canadian cheese to tariffs associated with disputes over Canadian liquor policies and automobile tariffs.
Congress did not authorize unrestricted tariffs on unrelated products simply to increase pressure on a trading partner.
Congress Required 30 Days. The Administration Waited Seven.
Section 338 expressly provides a 30-day waiting period before duties may be collected on products identified in a proclamation.
On September 8, the administration added new Canadian products to its tariff lists but directed collection to begin September 15—just seven days later.
Our lawsuit challenges the premature collection of these tariffs and seeks refunds for affected importers.
Even if the administration otherwise had authority to impose the tariffs, it cannot disregard the statute’s express timing requirement.
Section 338 Cannot Be Used to Circumvent Congress's Later Trade Laws
Congress enacted Section 301 of the Trade Act of 1974 to establish a comprehensive framework for responding to unfair or discriminatory foreign trade practices.
That framework includes investigations, findings, consultations, and other safeguards intended to ensure that trade remedies address identified problems.
Our lawsuit argues that Section 338 has been superseded or constrained by these later enactments and cannot be used as a shortcut around the limitations Congress established.
Unlimited Presidential Tariff Authority Would Violate the Constitution
The Constitution assigns Congress the authority to impose tariffs and regulate foreign commerce.
If Section 338 were interpreted to give the president virtually unlimited authority to impose sweeping duties whenever the executive branch chooses, it would raise serious constitutional concerns under the separation of powers and the prohibition against delegating legislative power without meaningful limits.
The administration cannot use Section 338 to reclaim the sweeping tariff authority the Supreme Court rejected under IEEPA.
Congress writes the tariff laws. The president must follow them.
The Real-World Cost
American Milk. Canadian Brie. A 50% Tariff.
One of the clearest examples of the harm caused by these tariffs begins on American dairy farms.
Gellert Global Group works with an Ontario-based brie supplier that purchases cow’s milk from dairy farmers in upstate New York. That American milk is transported to Canada, processed into brie, and exported back to the United States for American consumers.
Under the administration’s Section 338 tariffs, that finished cheese is now subject to an additional 50% duty. In other words, an American company must pay a steep tariff on cheese made using American milk—simply because it crossed the border for processing.
The tariffs also affect Canadian goat cheese suppliers that help satisfy American demand exceeding available domestic production.
These tariffs disrupt a two-way trading relationship supporting American farmers, food producers, manufacturers, retailers, restaurants, distributors, and consumers.
Meet Our Client
An American Business Standing for Liberty
Gellert Global Group
A third-generation, family-owned American food importer connecting producers around the world with American businesses and consumers.
What's Next
Seeking Relief for American Importers Nationwide
The Liberty Justice Center is not simply fighting for relief for the business named in this lawsuit. We are seeking certification of a nationwide class of importers subjected to Section 338 tariffs, along with a separate subclass of businesses that paid duties before the statute’s mandatory 30-day waiting period expired.
Our lawsuit asks the court to stop the unlawful tariffs and order refunds, with applicable interest, of duties collected without legal authority. The court has not yet certified either proposed class, and refunds have not been ordered.
American businesses should not have to file hundreds of separate lawsuits to enforce the same constitutional and statutory limits on presidential power.
Have You Paid Section 338 Tariffs?
If your business has paid Section 338 tariffs on goods imported from Canada, sign up below to receive updates about our litigation and potential tariff refunds.
Questions?
Send us an email at [email protected].
Signing up for updates does not establish an attorney-client relationship or guarantee eligibility for a refund.
support our work
The Liberty Justice Center represents its clients free of charge.
From our successful Supreme Court challenge to the IEEPA tariffs to our ongoing litigation under Sections 122, 301, and 338, we are fighting to protect American businesses from unlawful government action and defend the Constitution’s separation of powers.
Your support helps us continue challenging unlawful tariffs and protecting the constitutional rights of American businesses.