Ask Rick Woldenberg Why He's Defying the President
tariffs before the US Supreme Court, and he might mention a fluffy unicorn yoga ball.
Woldenberg, who runs two educational toy businesses near Chicago, says BubblePlush Yoga Ball Buddies, a company designed to help kids regulate their emotions, has been hit particularly hard by the instability of Trump's global policies.
.
BubblePlush, which also comes in penguin and puppy shapes, was planned to be produced in China. But when Trump raised tariff rates on imports from that country to 145 percent in April, Woldenberg's team tried to move production to India, only to see Trump cut tariffs in China and raise tariffs on imports from India. The company rushed to deliver the goods before India's 50 percent tariff took effect, but the shipment arrived six hours late.
“We paid a $50,000 fine for this,” Woldenberg said from a toy-lined conference room in Vernon Hills, Ill. “We're like wandering refugees in the way we make our products. We move from jurisdiction to jurisdiction, and no matter what we guess, it doesn't seem right.”
Woldenberg's companies are Learning Resources Inc. and Hand2mind Inc. — sued in April to invalidate the tariffs as exceeding Trump's authority. The lawsuit is now before the Supreme Court in one of the most economically significant fights in the country's history. During arguments on Wednesday, the court will consider eliminating most of the tariffs Trump has imposed since taking office, potentially affecting trillions of dollars of trade. A ruling against Trump would undermine his ability to use tariffs as a catch-all tool to extract concessions from trading partners and could mean damages in excess of $100 billion.
More broadly, the case marks a turning point as Trump claims powers far beyond those claimed by his predecessors in the White House. While the conservative-controlled Supreme Court has largely accommodated Trump this year, it has done so only through preliminary rulings. A tariff ruling in Trump's favor could set a far-reaching precedent allowing presidents to take unilateral action to address an emergency.
“THE MOST IMPORTANT CASE IS IN THE SUPREME COURT OF THE UNITED STATES,” Trump said Oct. 24 on social media.
If the tariffs are eliminated, small and medium-sized companies will be able to qualify for the loan. The court is also considering separate cases brought by five other closely held businesses and 12 states with Democratic attorneys general. Hundreds of other small companies have opposed the tariffs, mostly through the We Pay Tariffs coalition.
You won't find companies paying the highest amounts anywhere. Although the U.S. Chamber of Commerce opposes tariffs, major importers such as General Motors Co. and Walmart Inc. are not being named in the case.
“I was shocked that those with so much more power and money didn't come forward,” said Victor Schwartz, president of VOS Selections Inc., a New York wine importer helping push another small business lawsuit.
Woldenberg says he's excited to play a leading role in this year's tariff bill, which is estimated at $20 million to $30 million, well above last year's $2.3 million total. He says companies have raised prices by “mid-single digits” to recoup some of the costs. He says he sued after other companies that were considering suing backed out.
Woldenberg says he expects to spend millions of dollars on legal bills even after accepting donations from unnamed third parties. He says he will not accept help from non-Americans or anyone with political views. “I’m not a front for anyone else,” he said.
Trump has offered a range of justifications for his tariffs, saying at various times they would raise revenues, open foreign markets and bring manufacturing jobs back to the United States. He has used tariffs to try to force Canada and Mexico to crack down on illegal immigration, Brazil to stop prosecuting former President Jair Bolsonaro, and India to stop buying Russian oil.
Advocates say Trump's tariffs will strengthen the country in the long term. “Collectively, this clearly produces a net benefit for our country and American workers,” said Jill Homan, deputy director of trade and economic policy at the pro-Trump American First Policy Institute.
Woldenberg begs to differ. While the vast majority of its products are manufactured overseas, he calls this a long-standing industry practice reflecting lower labor costs overseas. Meanwhile, the two companies, founded separately by his father and mother, employ 500 people and generate sales of more than $250 million a year.
Woldenberg, 65, beamed with pride recently as he watched boxes move along a maze of conveyor belts in Learning Resources' 356,000-square-foot warehouse, using bar codes and a handful of workers to get spelling games, construction sets and microscopes to the right places. The warehouse, built four years ago, cost more than $40 million to build, he said.
“The evil companies that make products overseas are not investing in America,” he said, ridiculing arguments for tariffs. “Sorry, but that doesn't concern me. It wasn't free, and it's technology, and most of it came from the United States, and these people who work here are Americans.”
Tariffs are also hurting much smaller companies, according to David Levy, whose Virginia-based company MicroKits LLC is also challenging the tariffs. Levy, whose business makes educational electronic kits and musical instruments, says he has had to cut his part-time employee's hours and raise prices.
“I just passed on most of the costs because I need cash flow to keep buying more parts,” Levy said.
White House spokesman Kush Desai said the tariffs have “already helped secure many trade deals that level the playing field for American workers and industries and provide trillions in investment to create and hire in America.”
The court will decide the fate of Trump's April 2 “Emancipation Day” tariffs, which impose levies of 10 to 50 percent on most imports depending on country of origin, as well as separate tariffs Trump imposed on Canada, Mexico and China in the name of combating fentanyl trafficking.
Trump says the tariffs were authorized by the International Emergency Economic Powers Act of 1977, which gives the president an arsenal of tools to address national security, foreign policy and economic emergencies. Administration lawyers say the nation's trade deficit and fentanyl crisis constitute an emergency that allows the president to invoke the law.
“For the President, these cases present stark choices: with tariffs we are a rich nation, without tariffs we are a poor nation,” Solicitor General D. John Sauer said in court papers.
Opponents say that even if these were legitimate emergencies, the 1977 law does not authorize tariffs, a power that the Constitution gives to Congress. The measure makes no mention of tariffs or taxes, although its key provision says the president can “regulate” the “importation” of property in the event of an emergency.
The president “does not have the power to impose taxes on American citizens without the authorization of Congress,” said Michael McConnell, a professor at Stanford Law School and a former federal appeals court judge who is representing other small businesses suing. “And tariffs are taxes on American importers.”
If Trump loses, administration officials say most of the taxes could be imposed using other, more complex legal tools. Trump's tariffs on steel, aluminum and autos were imposed under a different law, so they are not directly affected.
“We have contingency plans in place, and the president's trade team is working diligently on those contingency plans,” White House press secretary Caroline Leavitt said on Fox News Channel's Sunday Morning Futures. “The importance of this cannot be overstated. The president must have extraordinary authority to use tariffs.”
Trump told reporters on Sunday that he did not think he would attend the oral arguments, a change of heart after suggesting in mid-October that he might watch the hearing in person.
“I just don’t want to do anything that would detract from the importance of this decision,” he said. “It’s not about me, it’s about our country.”
Woldenberg, a former corporate lawyer, will be there for his first Supreme Court hearing.
“Personally, I don’t tell myself that I’m challenging Donald Trump,” Woldenberg said. “I stand up for myself, I stand up for the people who depend on our company, and I think I speak out about issues that matter to every American.”
—With assistance from Laura Curtis, Adriana Lowenkron, Maria Paula Mijares Torres and Vincent Lee.
