The trade war’s legal architecture has been rebuilt twice since February, and the market has stopped paying attention. That may be a mistake, particularly for anyone holding Ford, GM, or Stellantis.
Gellert Global Group Corp. filed a lawsuit on October 20, 2026, challenging 50% tariffs on certain Canadian imports under Section 338 of the Tariff Act of 1930. Section 338 is a Depression-era statute, part of the 1930 Smoot-Hawley Tariff Act, that no president had used to impose a tariff until this year. Gellert is represented by the Liberty Justice Center, the same legal group that successfully challenged Trump’s IEEPA tariffs at the Supreme Court earlier this year.
The Liberty Justice Center filed the case for Gellert and a proposed class of importers. If the Court of International Trade certifies that class, the remedy would extend well beyond one New Jersey food importer. The remedy sought is a declaration that the duties are unlawful, an order to stop collecting them, and refunds with interest. The Section 338 actions cover about $20 billion in annual imports, roughly 5% of the roughly $383 billion in goods the U.S. imported from Canada in 2025.
This is the third legal wall the administration has hit. The Supreme Court held in Learning Resources v. Trump that IEEPA did not authorize the President to impose tariffs, in a 6-3 decision. The Court of International Trade then held the replacement tariffs implemented under Section 122 of the Trade Act of 1974 unlawful in Oregon v. United States, and that decision remains on appeal. Section 338 is the third vehicle.
The legal arguments in Gellert are specific enough to take seriously. The lawsuit argues that Canadian policies identified by the Trump administration do not justify the sweeping tariffs imposed, noting that some of the measures arose in response to Trump’s own tariffs, while others involve long-running Canadian policies, including dairy rules governed by USMCA. The complaint also carries a procedural count: the collection of Section 338 duties on newly listed products is alleged to have violated the statute’s 30-day waiting period.
Now to the trade. The market finished pricing tariff risk into Detroit’s Big Three months ago, when each company disclosed its exposure and updated guidance. Ford pegged its net tariff hit at roughly $1 billion for 2026 and has said it plans to move production of some Lincoln models for the U.S. market out of China to the United States. GM expects gross tariff costs of about $2.5-$3.5 billion this year. Stellantis has said the tariffs will cost it about €1.5 billion in 2025. Those numbers are baked in. A court injunction blocking the 50% Section 338 duties is not.
Canada announced an 8.7 billion Canadian dollar plan on October 21, 2026 to support steelmakers and automakers, with Prime Minister Mark Carney and Ontario Premier Doug Ford rolling out a five-year push that includes about C$5.2 billion for steel and C$2.5 billion for automakers. That is a defensive posture, which tells you Ottawa sees no negotiated resolution imminent. The legal channel is more live than the diplomatic one.
How to Size the Exposure
The Gellert case is not a guaranteed win. The Liberty Justice Center succeeded at the Supreme Court on IEEPA because the statute’s text gave no clear tariff authority. Section 338 is written differently: it authorizes the President to impose additional duties not to exceed 50% ad valorem to offset a burden or disadvantage placed on U.S. commerce by foreign discrimination, and it provides that the new or additional duties are collected 30 days after the proclamation. The administration has a textual hook it lacked under IEEPA. Still, the procedural timing claim, the implied-repeal argument, and the class structure create genuine uncertainty.
For F, GM, and STLA, the relevant question is not whether Gellert wins in the next 90 days. It is whether the litigation lengthens the tariff timeline or, at the margin, creates pressure toward a negotiated resolution. The legal uncertainty around Section 338 is a real and present cost on capital planning that neither company can hedge away, and with plant siting decisions running on multi-year timelines, both GM and Ford face a window too short to restructure sourcing and too long to ignore in near-term guidance. A successful injunction would be a material positive catalyst that current prices do not reflect. Keep the docket open.
