An eighth grader could figure out the Supreme Court tariffs case.

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On Wednesday, the Supreme Court will hear oral arguments in a pair of challenges to President Donald Trump’s move on April 2—or “Liberation Day,” as he proclaimed it—to impose sweeping tariffs on virtually all goods imported into the United States. Although the stakes are huge for the American economy, as well as global trade and foreign policy, the cases have become a vital test of the scope of presidential power to regulate international trade without Congress.

Learning Resources, the plaintiff in this case, is a small, family-owned business that makes educational toys, most of which are produced overseas. The company filed suit in April. The court below ruled against Trump, as have various subsequent courts. The White House has taken the position that while Congress usually has exclusive jurisdiction over tariffs, a 1977 federal statute, the International Emergency Economic Powers Act, allows the president to take action directly to “regulate” imports and exports to “deal with any unusual and extraordinary threat” originating abroad.

Rick Woldenberg, the CEO of the Illinois-based Learning Resources, spoke to Dahlia Lithwick on this week’s Amicus podcast about what caused a small, family-run business to take the government all the way to the Supreme Court. Their conversation has been edited and condensed for clarity.

Dahlia Lithwick: Can you start by telling us what your businesses produce and why so much of it gets made abroad?

Rick Woldenberg: Well, our companies date back to a laboratory supply company that my grandfather bought in 1916. So I’m actually third-generation. I have three kids who work at the business, so they’re fourth-generation. And we have over 500 employees. We have an office in the U.K. with 50 people and a lot of people here in Chicago. We have an office in L.A. too. We make hands-on learning materials, which are sold to schools and also are sold into the home as toys. And we make curricular materials as well. Most of the products we sell today were never made in this country. Many companies make their products overseas because it allows them to sell the products at a lower price. Not only are we a multigenerational family business, but we’re a mission-driven business, and so we’re committed to the mission of helping kids get a great start in life, develop a love of learning. So we’ve been making a lot of products overseas in order to keep our prices low.

President Donald Trump had been talking about tariffs for a long time and certainly talked about it during the campaign. You knew something was coming, but were you watching on April 2, when he announced his “Liberation Day” tariffs?

I was in a meeting, and when I got out of the meeting, the world had changed. It was not a happy moment. We were in the process of trying to develop a new building for our business, and I killed that deal that day, dead, and also terminated discussions on a joint venture we were going to form to enter another export market.

But we weren’t surprised about tariffs per se. He had put tariffs in place for fentanyl trafficking prior to that. And we knew, from what he said on the stump, that this was coming. In fact, in Trump 1.0, he had imposed tariffs. And so we’d been actively working on shifting our supply base out of China. By the time Trump came in in January, we had succeeded in moving about 16 percent of our items out of China, but it turned out not to be enough.

What happened in the week of “Liberation Day” is, the numbers just went stratospheric. He had promised a maximum of 60 percent tariffs on the stump, which at the time seemed unthinkable. The amount we were spending before was under 2 percent, so to go to 60—that seemed crazy. By the end of the week following April 2, we were at 145 percent.

I want to be clear: Tariffs do not get paid by China. Either they get paid by your company, you absorb the cost, or they get passed along to your consumers. Despite the fact that you won very decisively in the court below, the tariffs remained in effect. How has that played out in terms of your production, your bottom line? 

First, you need to understand some basic accounting. Some of the tariffs have sort of passed through the python and hit our profit-and-loss statements. Some of the tariffs are still on our balance sheet showing as inventory because they’re an inventory cost until we sell them.

This past week, I was given updated numbers on what we project to have spent in cash on tariffs this year, which would be both what’s on the balance sheet and what’s on the [profit-and-loss statement]. We’re expecting to come in around $14 million. Last year, the expense for [International Emergency Economic Powers Act] tariffs was zero. I estimated, based on the run rate of our 2025 budget at 145 percent when we were more dependent on China and no one knew what was coming, that it could be $100 million on an apples-to-apples basis. In 2024 we paid $2 million in tariffs and duties unaffected by the IEEPA. So $14 million in the past eight months, with all the monkeying around that we’ve done, suggests that next year it could be $40 million. And who knows if that number is high, low, or indifferent, because they change the tariff rates every single day.

If you paid zero in real estate taxes on your house last year and they said, “This year, we think it’d be jolly good if you pay $14 million and, next year, $40 million,” you’d probably notice it’s a big number. It’s massive in what we try to produce as a profit, and it’s very disruptive.

I don’t think anybody big, small, or indifferent can carry these tariffs indefinitely. The reason they’ve not been passed on fully by people is basically dependent on how much inventory you had and how intelligently you bought your inventory. So to some degree, it’s a question of when the piper will be paid, not if the piper will be paid.

From the perspective of someone that runs a long-standing family business, you recognize that over the years thousands of people have worked for your company. That’s thousands of people whose families depended on that livelihood, who bought homes based on the promise that they would continue to get paid. They paid college tuition, they paid for vacations, they funded their retirement, sometimes they bought a bigger house, a nicer car. All of that is dependent on their earnings from your company, and that’s something that we do as a family because we’re committed to this business long term. We also pay taxes. So on the buildings that house our businesses, we pay taxes, which fund local schools and the local fire department, and we do business with local businesses. This is what makes local communities healthy, and there are zillions of these small businesses that prop up local communities. That’s why you enjoy the life you do in your local community.

Our business has always been headquartered in Chicago. That’s where I live. I’m not willing to allow this to be destroyed. It’s just, it’s too important to me. I’m not gonna let them in Washington ruin this.

You are a graduate of law school. You weren’t a litigator, and we’re not going to ask you to litigate this, but you did practice law before joining the family business. Can you give me your best effort to explain to a lay listener what it is that the Trump administration says is its theory of this case? 

The argument is that the IEEPA provides a power that can be exploited by the president in an economic emergency relating to international sources that allows him to “regulate … importation.”

That quote in and of itself somewhat misstates what the law says, but they say it is implicit in the concept of regulation that a president would be able to impose a tariff, because tariffs have been used to regulate in the past. A tariff is a tax that is imposed on importers when they bring merchandise into this country. So that is their fundamental argument.

If you read the briefs submitted to the Supreme Court, they go a little further, and they say: This is not really a tax case. This is a case about the president’s right to administer foreign affairs, which is Article 2 in the Constitution. And because Article 2 in the Constitution gives him the right to administer our foreign affairs, that is an independent power that he has. And so, because he’s exercising his independent power, if you read tariff rights into the word regulate, he has the power to do that as part of his power to oversee foreign affairs. That’s their argument.

There are answers to that, but I’d like to actually highlight what an eighth grader might say. Let’s not be a lawyer. Let’s be an eighth grader who just finished the section of history class where they go over “How does the U.S. government work?”

An eighth grader would say: “Isn’t there a problem with that? Remember, we learned that in the American Revolution, they didn’t like taxation without representation. Didn’t they throw tea into the pond somewhere?” Yes, they did. And Mr. Madison said, “No, we’re not going to let the king set taxes on us when we’re not present in Parliament. We are going to organize our government so that no individual can set taxes on Americans. It has to be a legislative process.” That’s why you should read Article 1 before you read Article 2. In Article 1, it says that Congress has a vested power to impose and collect taxes, regulate commerce, and it is assigned the responsibility of drafting and passing legislation. We can call that James Madison’s gotcha. So an eighth grader would say: “Mr. Trump doesn’t have the power individually to impose a tax because he doesn’t like a commercial that’s running on TV.” An eighth grader would say: “Sorry, I didn’t see that in my textbook.”

Why is it that you, this family-owned business with 500 employees, and VOS Selections, another family-owned wine business, are out on the front lines, pushing back against not just the on-again, off-again tariffs but what you have just described as a purely monarchic theory of executive power? Where’s everybody else? Why is it that the people who stand to lose the most are not being backed up with armies of huge corporations locking arms with you? It does feel as if this is falling heaviest on small businesses.

It’s difficult for me to comment on why other people do things or don’t do things. I can speak more accurately as to why I did something. I was pissed off. I’m defending an enterprise that means a lot to me. And it so happens I know a little bit about the law and I thought it was illegal. At some point, somebody needs to stand up.

If everybody thinks that somebody should stand up, just not me, nobody stands up. You don’t have to be actually one of the great historians to know from recent events that when nobody stands up, sometimes bad things happen. If you’re waiting for a postcard to come in the mail that says, “Hey, Rick, it’s your turn,” that’s not going to happen. Someone just has to realize it’s time to do something. So, right, wrong, or indifferent, I decided to do it, and I decided to put the money down to pay the legal fees and do it. Luckily for me, I’m spending so much money on tariffs that I can afford to spend a little bit more on the legal fees, because if I’m going to drown in tariffs, I might as well hire some good lawyers.

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I think the Supreme Court must be concerned with what eighth graders think. And in this particular instance, if they somehow can’t find a way to say “Regulate does not include the power to impose a tariff,” then I think they are really upending what Mr. Madison did, and I think that is unthinkable. The opportunity, the responsibility to defend Madison’s idea and the integrity of that idea in modern society today is one of the great honors of my life. To stand elbow to elbow with Mr. Madison is not something I ever expected to be able to do.

But I think the court also has to weigh what the consequences will be for American society, not just now but after now, in the future, what people expect from their government, what they can rely on in terms of rule of law. It’s a very heavy decision regardless of how confusing the lawyers make it. I’m looking forward to having our day in court, and I believe that our position is the right one on the law. I could obviously talk for an hour about that, but it’ll probably be a good listen. I encourage everyone to tune in.

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