U.S. Cheese Importer Sues Trump Over 50% Canada Tariffs, Citing $40-Million Annual Cost

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A tariff fight that sounds technical on paper is turning into an expensive test of presidential trade power. Gellert Global Group, a New Jersey-based food importer and distributor, has sued the Trump administration over 50% duties on certain Canadian goods, saying the levies could cost it about $40 million a year on Canadian cheese alone. The company filed its case on October 20, 2026, in the U.S. Court of International Trade and is asking the court to halt collections and return duties already paid.

At the centre of the dispute is Section 338 of the Tariff Act of 1930, a nearly century-old provision President Donald Trump revived in 2026. The case now brings together constitutional questions, Canada-U.S. dairy tensions, supermarket economics and a cross-border supply chain in which American milk can become Canadian brie before returning to U.S. shelves.

A Family Food Business Turns to the Trade Court

Gellert Global Group is not a small specialty shop trying to survive one difficult shipment. The family-run company says its combined businesses generate more than $1.7 billion in revenue and source more than 4,000 food items from over 60 countries. Its customers span retailers, distributors, food-service chains, hotels, cruise lines and manufacturers. That scale makes the lawsuit especially significant today: the plaintiff is an established importer with deep logistics networks, not a newcomer testing the market in North America.

Represented by the Liberty Justice Center, Gellert is seeking relief for itself and a proposed class of importers affected by the Section 338 measures. It has asked the U.S. Court of International Trade for a preliminary injunction to stop collections, summary judgment in its favour, and refunds with applicable interest. The case is pending, so none of Gellert’s legal claims has yet been accepted by the court as a final ruling.

The $40-Million Figure Comes From a Very Real Customs Bill

The headline number is a projection, not a bill Gellert has already paid. According to reporting on the complaint, the company imported roughly $71 million of Canadian cheese in 2025 and expects about $80 million of such imports over the coming year. At a 50% additional duty, that produces the approximately $40-million annual estimate cited in the lawsuit. The company says those cheeses had previously entered duty-free when they qualified under the U.S.-Mexico-Canada Agreement.

The immediate charges are already substantial. Gellert says it paid at least $520,538 in Section 338 duties on 22 cheese entries between September 16 and October 11. One September 28 shipment of goat’s-milk cheese was valued at about $120,288 and drew roughly $60,144 in tariffs. Co-chief executive Thomas Gellert has said the company is absorbing the new costs through the end of 2026 to protect shelf space and customer relationships rather than immediately raising consumer prices.

Why a 1930 Law Is at the Centre of the Fight

Section 338 was enacted as part of the Tariff Act of 1930. It allows a president, after finding that a foreign country discriminates against U.S. commerce or imposes unequal burdens, to levy duties of up to 50% when the public interest is served. The statute also says those duties begin 30 days after the relevant proclamation. Before 2026, no president had used Section 338 to impose tariffs, according to the lawsuit and reporting.

Gellert argues Congress later created a mechanism in Section 301 of the Trade Act of 1974 for responding to unfair foreign trade practices, including investigations and safeguards. Its lawyers contend that Section 338 was effectively displaced or cannot be used as an unrestricted alternative. The administration starts from the opposite position: its proclamations cite Section 338 as an existing grant of tariff authority. The court must decide how those statutes fit together and what limits Congress intended.

Trump’s Dairy Case Against Canada

The White House says the dairy tariffs respond to unequal Canadian treatment of American cheese. Its July 20 proclamation focused on tariff-rate quotas, or TRQs, that allow quantities of dairy products to enter Canada at lower rates. The administration argues that Canada lets retailers participate in the CETA quota for European cheese while excluding retailers from the USMCA quota, putting U.S. commerce at a disadvantage. Trump said a 50% duty on Canadian products would offset that burden and pressure Ottawa.

The dairy dispute predates the new tariffs and is not simple. In a 2023 USMCA dispute, two of three panelists found that the Canadian dairy allocation measures challenged by Washington did not violate the USMCA provisions cited by the United States, while one panelist agreed with a key U.S. complaint about excluding retailers and other importers. The 2026 Section 338 action therefore opens a different legal front over market-access frustrations.

A Seven-Day Timeline Creates a Separate Legal Vulnerability

Gellert is attacking not only the president’s authority but also the timetable used to expand the tariffs. The administration modified product lists on September 8, with additions taking effect September 15. Gellert says cheeses it imports were among the newly covered products, meaning customs began collecting the 50% duty seven days after the change. Its complaint argues that this conflicts with Section 338’s language directing that additional duties begin 30 days after a proclamation.

That timing argument could give the court a narrower way to address collections without resolving every constitutional question. The statute also allows a president to suspend, revoke, supplement or amend Section 338 proclamations when the public interest requires it, language the July White House proclamation emphasized. Judges will have to determine how that amendment power interacts with the 30-day rule. Gellert is seeking refunds, with interest, for duties it says were collected unlawfully during that period.

The Supply Chain Crosses the Border More Than Once

One detail in Gellert’s case shows why a national label can be misleading in modern food trade. According to the company and its lawyers, one Canadian cheese supplier buys milk from dairy farmers in upstate New York, turns that milk into brie in Canada, and ships the finished cheese back to U.S. customers. A tariff on the returning cheese therefore lands on a supply chain that begins with an American farm and depends on businesses on both sides of the border.

Gellert also says its Canadian operations sell American-made cheese into Canada, exposing that business to Ottawa’s retaliation. Canada announced counter-tariffs covering $27.6 billion in U.S. imports, with rates of 15%, 25% and 50% on selected goods beginning September 8; dairy was among targeted sectors. The result is a two-way squeeze: U.S. duties raise costs on Canadian cheese moving south, while Canadian retaliation raises barriers for American dairy moving north.

The U.S. Market Is Critical to Canadian Dairy

Canada’s dairy industry is heavily tied to American demand. Agriculture and Agri-Food Canada reports that the country exported C$536.1 million in dairy products in 2025, with the United States accounting for C$389.6 million, or 72.7% of the total value. Cheese represented C$131.2 million of Canada’s worldwide dairy exports that year, and Canadian cheese exports reached 9,847 metric tonnes. The United States is identified as a leading destination for those products.

That scale helps explain why a 50% duty can quickly reshape commercial decisions. Recent economic research on U.S. tariffs also suggests much of the cost initially falls on American buyers. An April 2026 NBER study estimated that about 90% of the 2025 U.S. tariffs studied passed through to tariff-inclusive prices paid by U.S. importers. That finding is not a forecast for Canadian cheese, but it helps explain why Gellert’s cash-flow, sourcing and pricing concerns are economically plausible rather than theoretical.

The Case Could Matter Far Beyond Cheese

The dispute is about cheese, but the precedent could be broader. Gellert is asking the trade court to stop Section 338 collections and return money paid, while seeking to represent other importers subject to the measures. The White House has said it will vigorously defend tariffs. A decision on the statute’s reach could determine whether Section 338 remains a rarely used provision or becomes a reusable tool for future presidents facing trade disputes.

The case arrives after a February 2026 Supreme Court ruling rejected Trump’s use of the International Emergency Economic Powers Act for broad tariffs. That decision did not resolve Section 338, which contains tariff language and raises different statutory questions. For businesses, the near-term issue is whether duties continue while the case proceeds. For governments, the larger issue is institutional: how far Congress has delegated tariff authority to the president and what procedural limits still constrain that power.

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