Liberty Justice Center Files First Lawsuit Challenging Trump's Section 338 Tariffs Against Canadian Imports
The tariffs are illegal for multiple different reasons.
Today, the Liberty Justice Center (LJC) filed Gellert Global Group Corp. v. Trump, the first lawsuit challenging President Donald Trump's massive Section 338 tariffs against a variety of Canadian imports. The case was filed in the US Court of International Trade (which has jurisdiction over tariff-related cases); Gellert Global Group is an importer of Canadian cheese subject to the tariffs. LJC is the same public interest group that I worked with on the case challenging Trump's earlier IEEPA tariffs, which ultimate resulted in their invalidation by the Supreme Court. I am not directly involved in the present case. But I support it and believe it deserves to prevail.
LJC has also filed cases challenging Trump's massive Section 122 and Section 301 tariffs. They have become America's premier public interest law group standing up for free trade and enforcing constitutional constraints on executive power over trade restrictions.
Section 338 was part of the infamous Smoot-Hawley tariff act of 1930, which gravely exacerbated the Great Depression. It has never been used before, likely because it was superseded by later laws.
I have previously written about why Trump's Section 338 tariffs are harmful and illegal. See my recent Montreal Economic Institute paper on this topic, and earlier pieces here, here, and here. To briefly summarize, the tariffs on Canada are illegal because 1) Section 338 has been superseded by later legislation, 2) even if Section 338 is still operative, Trump's tariffs do not meet its requirements because the Canadian actions they supposedly respond to do not "discriminate" against US goods, as the law requires, 3) Trump's tariffs do not "offset" the Canadian actions (as Section 338 also requires), but go far beyond that, 4) the administration's interpretation of Section 338 runs afoul of the "major questions" doctrine, and 5) if Section 338 is operative and does authorize the Trump actions, it would violate the constitutional nondelegation doctrine (which restricts delegation of legislative power to the executive).
The LJC complaint advances all five of these arguments. To prevail, they need win on only one. They also add a few more technical points that I will not try to cover here. LJC further seeks a class action certification for a class of all those importers subject to the Section 338 tariffs. If this succeeds, it would block all enforcement of Section 338 tariffs, not just those paid by Gellert.
This lawsuit does not directly challenge Trump's extension of the Section 338 action to categorically ban some Canadian imports, in addition to imposing tariffs. As far as I can tell, Gellert does not import goods subject to the ban (as opposed to the tariffs). However, as I explained here and here, the legality of the bans is dependent on that of the initial tariffs. In a recent Lawfare article, I outline the reasons why executive-imposed import bans are subject to most of the same legal constraints as executive-imposed tariffs.
Like the IEEPA, Section 122, and Section 301 tariffs, Trump's use of Section 338 is an attempt to convert a limited delegation of authority into a blank check enabling the president to impose tariffs whenever he wants. Courts should reject all of these power grabs.
I commend LJC for bringing this important case. And I hope and expect it may not be the last lawsuit challenging the Section 338 measures. Future cases might well challenge the import bans directly, as well as the tariffs.