New Jersey importer sues over tariffs on Canadian cheese

A New Jersey food distributor that supplies Canadian cheeses to American retailers is challenging the Trump administration in court over 50 per cent duties on those imports, saying it faces a tariff bill of about $40 million.

Gellert Global Group, a third-generation family company operating a refrigerated warehouse in Elizabeth near Newark Airport, imports roughly $80 million US worth of Canadian cheese a year, including Celebrity goat cheese from Mariposa Dairy in Lindsay, Ont., along with brie and camembert products.

The company is absorbing the tariffs for now. Chief executive Thomas Gellert said customers resist price increases after years of inflation, and he declined to pass the cost along.

"We can't sustain a tariff like this on these products for much longer," Gellert said in an interview at the warehouse.

The lawsuit was filed by the Liberty Justice Center, a non-profit legal advocacy group. The organization previously challenged tariffs imposed under the International Emergency Economic Powers Act; the U.S. Supreme Court struck down those measures earlier this year.

The duties at issue were put in place after trade talks with Canada collapsed in August. They rest on Section 338 of the U.S. Tariff Act, the Depression-era Smoot-Hawley statute, which authorizes tariffs of up to 50 per cent against a country that has discriminated against the United States. The provision had not previously been used to levy tariffs.

The administration says Canadian retaliation against earlier American duties constitutes discrimination, citing provincial bans on certain American alcohol, protections for Canadian dairy, and measures in the auto sector. The Liberty Justice Center argues that Section 338 does not let the executive branch impose tariffs whenever a trade dispute arises, that the targeted products do not connect to the alleged discrimination, and that implementation of some duties was rushed.

The initial list covered about $28 billion in Canadian goods, including cement, road salt and hockey sticks. It has been revised twice, with some changes made at the request of Republican Sen. Susan Collins of Maine, who sought exemptions for products important to her state as she campaigns for re-election.

Gellert pursued exemptions first through meetings with lawmakers and diplomats, including U.S. Ambassador to Canada Pete Hoekstra, arguing that American milk is used in some of the tariffed cheese, so U.S. farmers are also affected. Those efforts did not succeed.

Ryan Majerus, a trade lawyer and partner at King & Spalding International Trade Group, said the administration may struggle to justify the duties on specific products. "There's a good chance it could get reversed," he said, adding that the courts will consider the question broadly. He also said the administration could advance arguments to defend the authority it invoked.

Gellert said that if the dispute is unresolved by next year, the company will review whether it can keep importing these goods. He said removing a product from shelves makes it difficult to regain placement, and he noted there is not enough goat milk in the United States to meet demand.

If the company stops buying from Mariposa Dairy, he said, "they start culling goats. It's not something that can be brought back again." The company's relationship with Mariposa's owners, whom Gellert said he encouraged to invest in production, is at risk if imports cease.