Gellert Global Group, a third-generation food distributor based in Newark, New Jersey, has filed a lawsuit against the Trump administration. The company is challenging the legality of a 50% tariff imposed on Canadian dairy imports, such as Mariposa Dairy goat cheese.
The $80 million dairy import crisis in Newark
Gellert Global Group, a major player in the North American food supply chain, is facing a significant financial threat due to recent trade policies. The company, which imports approximately $80 million in Canadian cheese annually, is currently absorbing the costs of a 50% tariff to maintain consumer affordability. This move, however,is proving unsustainable for the family-owned business.
As CBC reported, CEO Thomas Gellert has warned that the business cannot shoulder these costs indefinitely. The tariffs impact a wide range of essential products, including various brie and camembert varieties, as well as specialty items like goat cheese from Mariposa Dairy. gellert noted that as the company pulls costs out of its own margins, the long-term viability of the business is at risk amid ongoing inflationary pressures.
Reviving the 1930s Smoot-Hawley Tariff Act
The legal challenge centers on the Trump administration's decision to utilize a dormant portion of the 1930s Smoot-Hawley Tariff Act. Specifically, the lawsuit targets the use of Section 338, a provision that allows the president to impose tariffs of up to 50% on countries deemed to be discriminating against the United States.
The Liberty Justice Center, a non-profit legal advocacy group, filed the lawsuit on behalf of Gellert Global Group. According to the Liberty Justice Center, the administration is misusing this Depression-era statute to bypass the oversight required by Congress. Sarah Albrecht, the center's chair and CEO, stated that no president should have the power to pull such a statute "off the shelf" to impose sweeping duties without constitutional limits. The center brings significant momentum to this case, having recently secured a Supreme Court decision that struck down the administration's IEEPA dairy tariffs.
From hockey sticks to $28 billion in Canadian goods
This dairy dispute is part of a much larger, escalating trade conflict between the United States and Canada. The U.S. Treasury originally imposed tariffs on roughly $28 billion worth of Canadian imports, which included diverse goods such as cement, road salt, and even hockey sticks.
The Trump administration justifies these measures by pointing to Canadian trade restrictions, including protective measures for their own dairy sector and policies affecting the auto industry. However, Gellert Global Group argues that these tariffs are economically destructive and inadvertently harm U.S. dairy farmers by taxing products made from American milk. This creates a complex economic loop where trade enforcement measures may actually undermine domestic agricultural interests.
The unanswered question of Section 338's reach
While the lawsuit seeks to establish legal boundaries, several critical questions remain unresolved. It is currently unclear how a court ruling might impact the broader U.S .-Canada tariff schedule or if the administration will attempt to find alternative legal justifications for these duties. Furthermore, the source does not clarify how Canadian producers or the Canadian government intend to respond to this specific legal maneuver by a U.S. distributor.
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