The lead challengers in the U.S. Supreme Court against President Donald Trump’s aggressive tariff program on imported goods are two Illinois-based companies that produce educational toys and learning materials sold nationwide.
Learning Resources Inc. and hand2mind Inc., both based in Vernon Hills, Ill., a Chicago suburb, sell hands-on learning toys such as Pretend & Play Calculator Cash Register, Spike the Fine Motor Hedgehog, and Botley, the Coding Robot. Their products focus on STEM learning, computer coding, social emotional learning, reading, and mathematics.
“We’re very active in the school business,” said Rick Woldenberg, the chief executive officer of both family-owned companies. “We all feel a sense of purpose and meaning from being part of a business devoted to kids and education.”
But most of the companies’ products are manufactured overseas—about 60% were imported from China until recent production shifts due to the tariffs.
Trump, citing the threat to the nation of trade deficits, imposed a baseline 10% duty on imported goods early in his second term, with country-specific additional tariffs. The president has had shifting policy pronouncements and postponements of some tariffs as it negotiates trade deals, but on paper, the China tariffs could reach 145% if fully implemented.
When larger companies shied away from a legal challenge, Woldenberg decided that he would file a lawsuit on behalf of his two companies.
“Mr. Trump … raised the tax rate on our company to the point it was asphyxiating,” Woldenberg said in an interview, reflecting many economists’ view that tariffs function as tax increases. “So I need to do something about that. Because it was not survivable.”
Woldenberg, a graduate of the University of Chicago law school and former practicing attorney, argues that Trump’s use of a 1977 federal law, the International Emergency Economic Powers Act (IEEPA), exceeds his powers. (He has turned over the legal work to a top Washington law firm.)
“Our case is not political,” he says. “I don’t have a political affiliation. I am not taking a position for or against Mr. Trump. I’m taking a position that what happened was not authorized by the law.”
A federal district court in Washington agreed, and issued an injunction blocking the tariffs only as applied to Learning Resources and hand2mind. Other courts, including one federal appeals court, have also ruled against the tariffs in a separate lawsuit by 12 states and a group of other small and medium-sized businesses that includes a wine importer, a plumbing supply company, a women’s cycling wear brand, and a specialty sportfishing gear company.
The Supreme Court agreed to the Trump administration’s request to take up the issue and will hear arguments in both cases on Nov. 5.
U.S. Solicitor General D. John Sauer, in a brief defending the policies, said, “To the president, these cases present a stark choice: With tariffs, we are a rich nation; without tariffs, we are a poor nation.”
Trump, at the White House on Oct. 15, said the Supreme Court showdown “is one of the most important cases in the history of our country because if we don’t win that case, we will be a weakened, troubled, financial mess for many, many years to come.”
Shifting production to ease the bite of tariffs
Learning Resources and hand2mind employ about 500 people in the United States, where they market, warehouse, print learning materials, and do some assembly of imported parts. But most of their thousands of products are manufactured in China, India, South Korea, Taiwan, Thailand, and Vietnam.
Trump’s 2nd-term tariffs have dramatically boosted the two companies’ costs.
“Hanging over my head is a 130% tariff on China,” Woldenberg said, referring to a combination of tariffs on imports from China that have been in large part paused until Nov. 10 by order of the president. “Is that going to happen, is it not going to happen? Who the hell knows?”
Learning Resources and hand2mind paid some $2.3 million in tariffs and duties in 2024. Woldenberg said the companies would face tariffs of as much as $100 million in 2025 if all the president’s tariffs took full effect and his companies did not take mitigating action.
“We can’t pay that,” he said.
Learning Resources and hand2mind shifted some of their production from China to other countries with lower tariff rates, including India and Vietnam (though Trump later raised the tariff rate for the former).
“Every day something changes,” Woldenberg said.
Besides those shifts, the companies are pausing production of some items and taking other steps to soften the blow. Woldenberg now estimates that his companies will pay between $5 million and $10 million this year. (Because the companies are privately owned, he declined to provide information on their annual revenues or earnings.)
He said the companies have explored manufacturing their products in the United States in the past, but found it infeasible. They can print certain educational materials and assemble some products, but only overseas factories can produce the products at costs that make them affordable.
A ready market in schools for hands-on learning tools
Learning Resources and hand2mind evolved from a family business that started in Chicago in 1916. It was a laboratory supply company providing beakers, Bunsen burners, and other science equipment.
Woldenberg’s father started hand2mind in 1965 to provide supplemental, hands-on learning tools to the growing number of Montessori schools. Learning Resources began in 1984 and eventually became the consumer-oriented educational toy company that it is today.
Both companies employ experienced educators for a rigorous process of developing manipulatives and other hands-on toys that support a broad range of curriculum areas.
Kevin Dykema, a former president of the National Council of Teachers of Mathematics, used hand2mind’s math products during his 26 years as a classroom teacher in Michigan.
“In math education, we’re making a consistent push to get students to understand the mathematics rather than just memorize a set of procedures,” said Dykema, who has done some consulting with hand2mind and conducted training about the company’s products in his district. “These hands-on manipulatives really help to foster that understanding.”
Among his favorite products are those designed to help students understand fractions by holding concrete objects that help them internalize the underlying mathematical concepts.
“Many adults have a notion that 1/3 is smaller than 1/4 because they see the ‘3’ and know it is smaller than ‘4,’” Dykema said. “But when our students are using fraction towers, fraction tiles, and fraction circles, they get that hands-on experience, and they start to recognize that 1/4 is actually smaller than 1/3 because the 1/3 pieces are bigger.”
Learning Resources and hand2mind “are extremely important, well-respected players in the toy community,” said James Zahn, the editor-in-chief of The Toy Book, a trade publication covering the North American toy industry. “In the preschool and educational categories, they’re known for creating innovative and timeless toys and games with stellar design.”
Zahn said the Illinois companies’ competitors in the educational toy segment include Lakeshore Learning, Fat Brain Toy Co., and Vtech Electronics, which in 2016 acquired the well-known LeapFrog brand.
Even toy giants such as Mattel and its Fisher-Price brand, Hasbro and its Play-Skool toys, and Spin Master, with Melissa & Doug products, participate in the educational toy segment, along with numerous smaller outlets, he said.
Zahn said that the president’s tariff policies have led to layoffs at many larger companies as well as manufacturing shutdowns in China and production relocations. But the industry, including retailers, have begun to live with reset expectations.
“The toy industry is a global business,” Zahn said. “It always has been. But the U.S. is on the creative side of the equation. … The ideas, the development, the design, the engineering, the marketing, the distribution—that industry and innovation is American. And the fruit of that labor could be a toy or game that becomes timeless.”
Zahn said he hasn’t heard “a single admission from this administration that Americans pay for tariffs, not China, India, or Vietnam.”
Trump relying on 1977 emergency powers law
The consolidated cases to be heard by the Supreme Court fall under the caption of Learning Resources Inc. v. Trump, and legal analysts say it is one of the most significant cases of the term and one of the biggest on the scope of the president’s powers.
The lawyers representing Learning Resources and hand2mind argue that the U.S. Constitution grants Congress the exclusive power to set tariff policy and that the 1977 emergency economic powers law relied on by Trump, known as IEEPA, does not authorize the broad tariffs the president is seeking to implement.
“In the five decades since Congress enacted IEEPA, no president until now has invoked that law when imposing tariffs,” says the brief for the companies by Washington lawyer Pratik A. Shah.
Sauer, the U.S. solicitor general, points to language in the statute that authorizes the president to “regulate … importation” of foreign goods to employ tariffs to deal with emergencies.
“President Trump determined that tariffs are best suited to address the trade deficit and drug-trafficking emergencies,” Sauer told the court. (The justification for increased tariffs on certain countries is to stem the flow of fentanyl and other lethal drugs.)
Trump has suggested recently that the tariffs case is so important, he may attend the arguments in the courtroom, which experts believe would be the first time a sitting president has done so.
Woldenberg will be there next week.
“Mr. Trump has said this is one of the most important cases in the history of this country, and I agree,” he said. “The outcome in this case is going to affect hundreds of thousands of businesses.”
He added, “We’re trying as a company to navigate back to normal. We’re trying to restore a sense of the everyday and the moving forward and focusing on the future, as opposed to the storm.”
2025-10-28 20:11:31
Source link
