How a small, family-owned toy business put a dent in Trump’s tariffs
Rick Woldenberg never expected to be at the center of a constitutional showdown. As the CEO of Learning Resources Inc., a family-owned educational toy company based in Chicago, Woldenberg has spent decades growing the business his grandfather originally founded in 1916. But after the Trump administration’s sweeping global tariffs pushed his import tax bill from $2.3 million to a projected $100 million, he decided he couldn’t wait for Washington to course-correct. He sued.
On Thursday, he won.
A federal district court in Washington, D.C. ruled that the Trump administration lacked authority under the International Emergency Economic Powers Act to unilaterally impose tariffs on trading partners. The decision blocked the Trump administration from collecting tariffs from Learning Resources — which sells educational toys like puzzle cards, flipbooks and brainteasers — and hand2mind, another toy business that joined the case as a plaintiff.
The day before, the U.S. Court of International Trade reached a similar conclusion in a separate case brought by a handful of small business owners. That decision effectively blocked almost all of the duties Trump had imposed since he took office, including a 30% levy on imports from China, 25% tariffs on many goods from Mexico and Canada, and 10% duties on all other trading partners.
“In the five decades since IEEPA was enacted, no President until now has ever invoked the statute … to impose tariffs,” U.S. District Judge Rudolph Contreras wrote.
While a federal appeals court has since put the Court of International Trade’s ruling on hold, temporarily reinstating the tariffs, Woldenberg says his legal win is a major step forward in protecting small business owners from unchecked trade policy shifts.
As previously reported by Modern Retail, the Trump administration’s tariffs have hit small business owners like Woldenberg hard, forcing them to shoulder the burden of higher costs — and without the cash flow or bargaining power of major retailers.
Modern Retail spoke with Woldenberg the day after his legal win to learn more about what the ruling means for his business, the impact that tariffs — particularly those on China, where Learning Resources manufactures 60% of its products — have had, and how he’s navigating the rapidly changing trade landscape in the weeks ahead.
This interview has been edited for length and clarity.
You just won your case. How are you feeling right now?
“We won a decision at the district court, which is fantastic. We will continue to pursue legal relief against the tariffs. We’re a fourth-generation business that has survived pandemics, world wars and multiple recessions. We will adapt, but it shouldn’t be this difficult.”
What’s next in the legal process?
“The case will likely progress through the circuit court and potentially reach the Supreme Court by fall.”
How have tariffs impacted your business financially?
“Last year, we paid $2.3 million in duties across all countries. This year, through May, we’ve committed to $4.8 million in tariffs. But if the 145% tariff rate goes through, we’re looking at potential duty costs over $100 million. For context, that would far exceed our entire company’s earnings.”
What does that mean for your employees and operations?
“About 30% of our office employees are now working full-time or part-time on tariffs. You’ve probably heard the expression, “building the plane while flying it.” That’s a good way to think about how we currently run our business.”
How has this impacted your supply chain?
“It costs us between $4,500 and $6,000 to move a product from Country A to Country B and establish new production. At the beginning of this crisis, we made just shy of 2,500 items in China. So, 2,5000 items at $6,000 a pop, we’re talking about $15 million. That’s a big total.
We can’t simply move everything overnight. Some products have no viable alternative manufacturers. Although the process to make the product is not rocket science, we haven’t found a specialist who can be trusted to make our products with all the different needs our products have.
Each time we move a product, we’re moving away from somebody we like and know and trust, and we’re moving it to a place where we have less experience and we have shorter relationships and less knowledge.”
How are you managing these increased costs?
“The only way that I and everybody else can solve this problem is by passing on higher prices. We’re implementing a mid-year price increase of under 10%, which is significant for us. Historically, we’ve been extremely conservative, with annual price increases around 1.5%. This isn’t something we want to do, but we’re essentially being turned into tax collectors.”