A legal group that has successfully sued to scuttle President Trump’s past tariffs filed another court challenge on Tuesday, this time targeting the steep duties that he has imposed as part of an ongoing trade war with Canada.
The lawsuit marked the fourth major case brought by the Liberty Justice Center, which once again asked a panel of federal judges to invalidate Mr. Trump’s actions on grounds that he had overstepped the law in ways that harmed American businesses.
The emerging battle concerned the president’s use of Section 338 of the Tariff Act of 1930, a long-dormant section of a decades-old trade statute meant to protect U.S. industry from unreasonable foreign practices. In September, Mr. Trump became the first president to enforce that power as part of a trade spat with Canada, which he has accused of discriminating against American industries.
The president’s tariffs, set at 50 percent, applied to a small yet shifting set of Canadian imports, including some alcoholic beverages, dairy products, hockey sticks, paper goods and more. Mr. Trump chose those items based on a belief that Ottawa had applied undue burdens to certain categories of U.S. products, a move that quickly prompted Canada to retaliate — and set off a tit-for-tat cycle that threatened to damage both economies.
The Liberty Justice Center filed its lawsuit on behalf of Gellert Global Group, a food importer and distributor based in New Jersey, which said it could face an estimated $40 million annually in taxes applied to Canadian cheese. The case challenged both Mr. Trump’s specific implementation of the duties and the broader constitutionality of Section 338.
The fate of Mr. Trump’s tactics now rests with the Court of International Trade, a specialized circuit that has repeatedly ruled against the White House and its tariffs in recent months. A victory could further embolden Mr. Trump against Canada or other countries, while a defeat would force the administration to pay back the money it has collected.
“The Section 338 tariffs are the administration’s latest attempt to exercise, through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress,” the lawsuit argued.
The White House did not immediately respond to a request for comment.
The lawsuit over Section 338 marked the latest legal headache for Mr. Trump and his economic agenda, which relies on sweeping tariffs to boost domestic manufacturing and raise new revenue. To date, the president’s multiple losses in court have backfired in one key respect, forcing the administration to pay back billions of dollars, plus interest, in illegally collected duties.
The string of defeats began with Mr. Trump’s use of an economic emergency law at the start of his second term to impose stiff duties on nearly every U.S. trading partner. The move drew a challenge by the Liberty Justice Center along with other businesses and state officials, which together prevailed at the Supreme Court in February.
Mr. Trump then imposed a 10 percent duty globally as a temporary replacement, only to draw successful lawsuits from some of the same opponents. They also targeted Mr. Trump’s third set of duties applied this year to dozens of countries, all accused of unfair trade practices. That case reached the Court of International Trade in late September.
The fight centered on Section 301 of the Trade Act of 1974, which has been used by presidents of both parties to impose tariffs in response to unfair foreign trade practices. While the law itself is uncontroversial, a panel of judges seemed skeptical during oral arguments about Mr. Trump’s specific use of it, though the court has not yet ruled on the matter.
A precursor to that law is Section 338, which permits tariffs on countries that place “unequal impositions or discriminations” on American goods but not on the rest of the world. In a series of proclamations dating back to the summer, Mr. Trump accused Canada of such practices, then later invoked a lesser-known provision of that same law to ban some Canadian imports entirely.
In its new lawsuit, the Liberty Justice Center claimed that Mr. Trump’s proclamations did not follow the letter of the law, citing a series of what it called procedural mishaps with the timing and rollout of the duties. It said that the Canadian practices identified by Mr. Trump as problematic — the justification for his tariffs under the law — were, in fact, “not discrimination.”
The center also questioned whether the statute itself had essentially been rendered obsolete, pointing out the legal and legislative history that ultimately yielded Section 301.
To successfully invoke that section, the administration must first complete a full investigation that documents another country’s unfair practices. But, instead, by opting to use the more outdated Section 338, Mr. Trump essentially sought to speed up his ability to impose tariffs, according to the lawsuit, which accused the president of circumventing the will of Congress in the process.
“Congress did not intend to leave in place a parallel authority that would allow the president to impose the same remedies, for the same conduct, free of every one of those safeguards,” according to the lawsuit.
