The Toymaker vs. the Tariffs
How Spike the Fine Motor Hedgehog took down Trump
A century-old toy company has taken down Trump’s Liberation Day tariffs with a self-funded lawsuit. But how?
Today’s guest is Rick Woldenberg, CEO of Learning Resources, creator of Spike the Fine Motor Hedgehog, and a successful Supreme Court plaintiff in Learning Resources, Inc. v. Trump, the case that ruled Trump’s IEPPA tariffs were illegal. Co-hosting is Peter Harrell, who submitted an amicus brief on the tariff case that shook the world.
Our conversation covers:
David v. Goliath — Why a mid-sized toy company sued when industry giants stayed silent, and what that says about incentives and courage in corporate America.
The Existential Math — How tariff costs were set to jump from $2 million to $100 million, putting 500 jobs and a century-old family business at risk.
Why Manufacturing Stays in China — The hard economics of toy production, supply-chain concentration, and why moving to Vietnam, India, or Mexico isn’t a simple fix.
Rule of Law and Refunds — What it means to win at the Supreme Court, what should happen with the overcollected tariffs, and the constitutional guardrails around taxation.
Listen now on your favorite podcast app.
Taking on Washington
Jordan Schneider: First off, congratulations, Rick. How did you celebrate?
Rick Woldenberg: I celebrated by trying to see what was in my inbox. It blew up. It’s been a whirlwind week. A lot of people wanted to talk to us about the victory. I also got to go to the State of the Union address, which was a coincidence but good timing. I’ve now participated in the democratic processes.
Jordan Schneider: Let’s go back to the beginning. Why did you decide to be the one to file the suit?
Rick Woldenberg: Well, it comes from a bunch of different places. One of the places it came from is that in 2017, I was among the people who pushed back on the border adjustment tax. That was a Paul Ryan, Kevin Brady invention, and it was set to be part of the Republican platform when Mr. Trump became president the first time around. That also would have killed us.
We, with some other people, resisted that, tried to draw attention to the negative effects of it, and eventually it was withdrawn. But that was my education in this aspect of tax law. When these tariffs got to the point in the week of Liberation Day of endangering the future of our business, I already had an opinion as to whether or not these kinds of taxes were lawful.
The other thing to think about when understanding my perspective is that I’m part of a multigenerational family business. Our education companies date back to the ’60s, but our family business dates back to 1916. There’s a strong sense of legacy there and a relationship between the health of our business and the community that we live in.
Finally, we’re a mission-driven business. When you work for a purpose-driven business where your goal is to make the world a little bit better of a place, you have a deep attachment to the role that you play in other people’s lives. I really was not prepared to allow a politician to ruin this. I decided that the risks of doing nothing were greater than the risks of doing something.
Jordan Schneider: Let’s do a little background on the firm and what the tariffs would have done to you guys.
Rick Woldenberg: When we created our 2025 plan and analyzed how the tariffs would affect us, the results were shocking. Based on our projected run rate, the cost of tariffs would have skyrocketed from just over $2 million in actual 2024 costs to approximately $100 million at their peak. This clearly wasn’t survivable.
I found myself staring out the window, contemplating our options. What else could we sell? What else could we make? How else could we help children and schools? We employ about 500 people — that’s 500 families counting on us. Because of this tariff scheme, we were facing potential catastrophe.
The situation was highly motivating, but also deeply concerning. In a family business, you have an acute awareness of the families that depend on you. Every person who works here has chosen to be here, and they all have families counting on them.
Jordan Schneider: We need a 101 on what you make. You haven’t mentioned that you’re a toy business yet.
Rick Woldenberg: Learning Resources and Hand2Mind are hands-on learning companies that specialize in experiential learning products. Our company’s origins date back to the mid-1960s, when my father founded Hand2Mind to serve Montessori schools. While we no longer serve that specific market, we’ve retained the experiential learning aspect of the Montessori system.
We apply the concept of learning through experience — which benefits both adults and children — to basic school subjects. Our focus areas include early childhood education, math, science, reading, language, STEM, social-emotional learning, and coding.
We develop our products in the US and manufacture most of them overseas, though we do maintain some US manufacturing for our school business. Our products are sold in over 100 countries, and we have a team of 50 people working in the UK. We’re both an exporter and an importer — a small to medium-sized company with a global perspective and reach.
The Economics of Making Toys
Jordan Schneider: Why can’t you make your products in America?
Rick Woldenberg: The basic reason is that our products require extensive handwork. After injection molding, they typically need to be painted or undergo other finishing processes. Most of our products also require assembly, which adds significant cost.
This type of labor is in short supply in the US. The reality is that workers can’t afford to live in America on the wages earned from hand-assembling toys that retail for $20. This simply isn’t the right location for this type of manufacturing.
If it were economically viable to manufacture here, everyone would be doing it — businesses respond to incentives. Many of our customers, particularly in the mass market, would love to advertise American-made products. It’s a classic marketing theme. But if it were possible, everyone would already be manufacturing domestically.
Peter Harrell: I come to this discussion mostly as a trade lawyer and policy person, but one thing that has struck me — partly through the case, partly through other research — is how concentrated the toy industry got in China. I’m curious why it was there. Did you try to move to Mexico or some of the other lower-tariff jurisdictions? How have you navigated the whole morass of tariffs that now aren’t just on China, but the whole world?
Rick Woldenberg: I was at the company when we first began to move to China. We had a small handful of Chinese vendors when I joined the company in 1990. Shortly after that, we lost a big order. We had established a customer relationship, and then they took all our business away and gave it to someone else who was able to sell similar products for a much lower price.
For us at that time, if we wanted to grow, we had to join everybody who was developing a lower cost base. We had no choice if we wanted to survive — we had to find a cheaper way to make our products.
The reason China succeeded is that it has everything. They have an enormous pool of molding machines. They have engineers, roads, inspectors, ports, and toolmakers. They have everything you need in enormous supply, and it’s a giant fluid market where they fill in all the gaps. When you make your product in China, there’s really nothing you need that can’t be sourced locally.
Almost every other country has deficiencies, and some of those can be quite significant. You might not think about it too much, but transportation in India is terrible. It depends on the location of your factory, which sometimes can be random, and getting your product from there to the port can sometimes take a tremendous amount of time. They have weather problems too. We’ve had orders in India years ago, where, during the monsoons, the roads would wash out, and you waited six weeks to be able to move the product to port. Hopefully, some of those problems have been addressed by now.
The reason China won is that China had everything, and it was functioning really well. Also, it was the first country that we taught in the Asian basin to make products to US. expectations for quality, consistency, value, and finish. They understood and accepted what the US. market wanted. It wasn’t an argument. You didn’t have to justify it. They knew everybody wanted the same thing, and they set their standards to that.
They’re very good at what they do. Of course, we were always doing business with private companies, family businesses like us. These are folks who put their money on the line and risk their money. They were honest businesspeople competing in a hyper-competitive market, just like us. They were good partners and always have been. They were entrepreneurial, always looking for a way to be better.
Jordan Schneider: How does that compare with the alternatives in Vietnam, India or Mexico?
Rick Woldenberg: Well, you have a critical mass issue. These other markets are still building up the critical mass. There are still things missing. The things that are missing have to come across borders, which makes sourcing very difficult.
When you have a product that’s brought in finished, but the components have to cross borders to become part of it, that slows things down. It introduces new levels of taxation and risks. You’re introducing multiple countries’ rules on quality, shipping, and international relations. It’s all kinds of problems. You’re a lot better off if everything comes from one place. Again, a natural advantage to China.
Rule of Law and What Comes Next
Peter Harrell: When do you think you’re going to get your refund? Which obviously includes the why, but how long do you think it’s going to take to actually get back these now illegally collected tariffs?
Rick Woldenberg: Well, I’m not in the camp of people who are wringing their hands. From my perspective, it’s rather simple. The federal government overcollected its taxes. There is law that governs the return of overcollected taxes. We have a right to the enforcement of those laws.
Those laws are very often not even given much thought. People just assume that it will happen. After all, they took money that isn’t theirs. They’re not entitled to it. I believe that they just have to have an adult conversation with the two sides, come up with a process, and then the court’s job will really just be to oversee it and make sure it actually happens.
Frankly, if it were my job to hand out millions of refunds, it would be very difficult for me. But the federal government does this through the IRS all the time. They know how to do this. They can do it.
I believe that today the mandate was sent down from the Federal Circuit to the CIT. It’s now all in the CIT. CIT does this as part of their franchise, so they know how to do it. Frankly, I’m expecting the DOJ to fall in line because we should not forget the words of Lincoln: government of the people, by the people, for the people.
The DOJ is not a foreign party. The DOJ is us. We sent our neighbors to Washington, we pay them with our money to do those jobs, administering those responsibilities. We have our money. They don’t have our money. They are we, we are they. They took too much. They need to give it back. There are laws. They have to follow them.
Peter Harrell: I have to say, I completely agree with you, Rick. I’ve always found this argument that maybe the government wouldn’t have to give the tariffs back conceptually bizarre.
We would all agree that if the government came and announced it was doubling our income tax rate with no act of Congress, we’d be like, “Well, of course, we get our money back once the courts throw that out, right?” If the Treasury Department suddenly said, “I’m taxing you at 70%,” we’d all agree you get your money back. There’d be no debate at all.
This is really conceptually no different. It’s just another kind of tax. I actually looked it up the other day on the refund morass issue, and it was 120 million — or maybe 117 million — tax refunds that the IRS processed in 2024, the most recent year that they’ve put the data out on. This idea that they don’t do this or that it’s impossible logistically, I find hard to believe.
Rick Woldenberg: It’s fearmongering and hand-wringing. I don’t take it too seriously. The laws protect us, and our case stands for the rule of law. I expect the court to get involved and force them to do this.
It really doesn’t matter what people’s personal opinion is on whether this is right, wrong, or indifferent. The Supreme Court has spoken. These taxes have been overcollected. There are laws — which are not controversial — that govern the return of overcollected taxes. They have to do it.
We’ve got to move away from a political cycle where political speech is dominating what is essentially a cut-and-dried governmental process.
Jordan Schneider: Can we come back to the decision to file the suit? We recently met at the Toy Fair. We’re walking around, and you guys weren’t the smallest booth, but you also weren’t the biggest. You also aren’t one of the biggest companies in the economy, where basically every single company in America was impacted in some way by the tariffs.
Why was it you and not Mattel or Apple or any of the other firms that probably had much easier access to the legal resources needed to file something like this?
Rick Woldenberg: I get asked that question a lot. It’s hard to answer why other people chose not to do this. Ironically, a lot of people were concerned about the cost. But from my perspective, cost was really not an issue — I hope my lawyers aren’t listening.
The reason is that the stated intent of this government was to have me pay these taxes forever. If you look at what that really means in the long run, it was not a hard decision to make.
I don’t know why other people made different choices. For me, I had something that I felt was important to protect. When I think about our business, we’re a mission-driven business, which is slightly different in nature from other kinds of businesses. We actually believe — rightly or wrongly — that if we didn’t exist, it would cause a little tear in the fabric of the universe. We just don’t think we’re easily substituted for.
If you really care about what you do, and it gives you meaning and a sense of purpose, you’ll stand up for that. There were personal aspects too. Our family has been a steward of this business for a long time, and the jobs that people had with our company meant a lot to them. You see a relationship between what you do, keeping your business healthy, and how your neighbors fare. In a purpose-driven business, you actually care about that stuff.
It’s much easier for me to say what was going through my mind than what was going through other people’s. Lots of different reasons have been held out as to why they did or didn’t take action. But it is true — and it’s a strange thing — that we are the only people who paid tariffs, were a victim of tariffs, and used our own money to sue. The other nine lawsuits were filed by governments, semi-governmental institutions, and interest groups with recruited plaintiffs. We put the money down.
Peter Harrell: I have to say, I admire you for it. I remember in Washington back in February, March, April of last year, I had done some rounds with some of the big trade associations and corporations, asking, “Are you guys going to sue?” I got into this because I’d been of the view from very early on that this was illegal, as a matter of law and principle. I was pro bono going around to see if anyone was going to sue. None of the big trade associations, none of the big corporations were willing to stand up and actually file suit.
It was great from my perspective when you guys decided to. As you know, there were also state governments and some impact litigators who brought small businesses into it. But it was striking to me how no one wanted to stand up and say all of this is illegal. Good on you for doing it.
Rick Woldenberg: Thank you. In a private business, you get to make these decisions yourself. I don’t need to worry about external factors if I don’t want to.
Frankly, we also had a clear vision that our lawsuit was not a political statement, and I didn’t allow it to become a political statement. We never took the view that it was us versus Mr. Trump. In fact, I’ve told people that we don’t need to have a view of the policy. We don’t consider ourselves pro-Trump or against Trump, and we try as best we can — sometimes it’s difficult — to not offer advice.
He has a hard job. I hope he does it well. We need him to be successful. But we’ve stayed away from doing things that we consider to be political. I feel as though we can take care of our own needs by simply pointing out that this was unlawful and sticking to that.
It’s possible that other folks didn’t see that this kind of case could be prosecuted without having a so-called bad guy on the other side. I don’t need to have an opinion about whether they’re bad or good. This is really about following the rules, which are the basis of the society that we depend on.
Jordan Schneider: Republicans buy sneakers as well as children’s toys, I hear. I do think there is something magical and remarkable that a small business can file suit and overturn the premier platform and policy instrument of the most powerful person on the planet. It makes me proud that the American system still has this in it. That was my big takeaway.
Rick Woldenberg: That is the American system, and one of the very important takeaways of the case is that in a rule-of-law system where everyone is equal under the law, you can win if you’re right — even if the other guy prints his own money and has thousands of lawyers that we actually pay for, not him. He has the power, he has the money, he has the elite status, but the law doesn’t care. The law makes us all equal.
We bet that the rule of law would remain supreme and that our position was correct on the law, which is something we were very confident of. This was reaffirming that.
The other thing our case illustrates, which is a little more elusive — it’s not really a legal point, but more about how we think about the communities we live in. We live in communities that most of us cherish, value, and would defend. The community could be where you live, but it could be whatever you define your community to be: your church, your pickleball league, your family — whatever you decide it is.
We all have a common benefit from these communities we value, but I’m not sure people spend enough time thinking about the common responsibility we have. What happens if you’re the only one in line, or you’re the last one in line with no one behind you? If everyone in the community agrees that we need to do something about this, but everyone also agrees it should be someone else — not them — what happens? What if every single person thinks that? You can find yourself in a pickle, and it can be a big problem.
I hope as people reflect on our case, they’ll give some thought to how that lands with them and what they think their shared responsibility is. It’s not for me to judge — it’s a very personal thing. It probably has to do with your family, your background, and your life experiences. But we’ll have better, more stable, more enduring communities if at least somebody stands up when somebody needs to stand up. If everyone thinks it should be someone else, sometimes it’s nobody, and that’s when bad things happen.
Peter Harrell: Obviously, the president has announced that he is using fallback authorities. He’s got these Section 122 tariffs at 10%, although he said he’s going to raise them to 15%, and then maybe develop more tariffs under other statutes behind that, since those tariffs expire at the end of July. Do you think you’ll be involved in another round of litigation, or do you think you’ve had enough of this so far?
Rick Woldenberg: I can tell you the President of the United States doesn’t have the constitutional authority to be a taxing body. When the President goes on TV and speaks about the taxes he intends to impose on me based on his personal preferences in an endless stream, that’s not right. This isn’t based on what I learned in law school, but what I learned in 8th grade.
How do we stop it is a different question. There are many different ways to go about that. One thing everyone should consider is who actually runs this country. The people who run this country are the voters. It’s all well and good for a member of the government to assert rights, but ultimately, we collectively hold our future in our hands.
If we don’t like this, if we think we’re being lied to, or if this is going to cause us to have fewer jobs, not more jobs, we have a solution. Every two years, we go into the voting booth, and we can actually take control.
There are several different ways we can resist this. The devil’s in the details. We won in the first case because the law was on our side. We have to carefully evaluate in each case how that’s going to play out. What’s the precedent? What’s the venue? These are careful things that must be thought through and should be seen in the context of an overall democratic process that ultimately is behind all of this.
Jordan Schneider: What did your employees think?
Rick Woldenberg: This has been a real shot in the arm. My impression in talking to lots of people — friends, family, and others — is that there’s an unfortunate rise in a sense of despondency in this country. There’s a growing lack of confidence in institutions we used to take for granted and in processes we used to take for granted. There’s even doubt growing in other people — can you trust these other people?
When we stood up and did something, aside from the fact that in the beginning some people thought Rick had lost his mind, the folks who work at this company are very proud. They are a small group of people who are closely associated with this win. They’re witnesses to history, and it’s a source of enormous pride.
We don’t have a whole lot of competition for standing up right now. It is a matter of pride, and it’s satisfying to me that we’ve touched as many people as we have. I’ve heard from a lot of people, many I don’t know. They send me letters, emails, and texts. It’s gratifying that if we’re going to leave our mark on the world, the mark we’re leaving is a positive one when it seems like people need to hear good news now.
Jordan Schneider: Do you care to share one or two of them?
Rick Woldenberg: They’re generally just heartfelt notes. People emphasize that they appreciate that we stood up. People also respect that it’s no slam dunk to sue in April and get a win at the Supreme Court in February. People were appreciative not only that we stood up, but that we made it happen.
When I say we made it happen, that is a large “we.” It’s certainly efforts from this company, but we had fantastic counsel. There were other plaintiffs, too. We were not alone, and they had counsel as well. Everybody who gave it the old college try and was involved, and certainly the esteemed other plaintiffs and counsel involved in our Supreme Court hearing, everyone should take a bow.
Everyone should claim victory and rejoice in that because we did it. It’s not an individual, it’s not me, it’s us, and we did it. Peter, that includes you as an author of an amicus brief. Everybody pitched in, and we drove it across the line collectively. We don’t have to divide up the spoils. Everyone can say, “I was part of that, I made a difference.” They should. It was a big win for all of us.
Jordan Schneider: Are we going to get a legal-themed line for 3-year-olds? Is this something on the horizon?
Rick Woldenberg: I hope not. I’m hoping that 3-year-olds can continue to learn through imaginative play. Imagining writing a brief or arguing in front of the Supreme Court — we’ll save that for later.
Jordan Schneider: Keep it to the 5s and 6s. Fair enough.
Rick Woldenberg: Absolutely. When career planning becomes more critical.
Peter Harrell: One of the small business plaintiffs in one of the other cases is a clothing company named Princess Awesome that makes brightly patterned kids’ clothing. My 9-year-old daughter loves them — it’s her favorite clothing company.
When I saw they had become a plaintiff a month or two after you filed, I wrote their customer support to say “good on you” and that I appreciated them filing suit. I got a nice note back. Maybe I should follow up and suggest they create a dress featuring Supreme Court justices that says “tariff-free” because of this case.
Rick Woldenberg: A friend of mine is one of the other plaintiffs in that case. Those folks have their hearts in the right place.
Sometimes I feel the issues we raised are marginalized because the companies that stepped up are small or medium-sized like ours — none of the big companies joined. It seems like it’s just the little guy’s problem, but I don’t agree with that.
After we won, companies that sued — Revlon, Barnes & Noble, Costco, FedEx — these are enormous companies whose refunds will be nine or even ten figures. This is really a problem affecting every company that crosses borders. In a world with global trade, that’s an awful lot of people and jobs.
The fact that the plaintiff companies were all small brands is an oddity of this case, but the issues are enormous. James Madison was very concerned about the executive being able to impose taxes. No kings.
Jordan Schneider: It is remarkable that all these firms are now set to gain literal billions of dollars back in taxes, but they were willing to entrust the handling of this case to smaller companies. No one thought the cost-benefit calculus was worth doing it themselves.
Rick Woldenberg: It’s the most American thing in the world to seek a tax refund.
Peter Harrell: They should get their money back. I feel like they should pay the lead plaintiffs a finder’s fee on this, but that’s not how the court system works.
Rick Woldenberg: I’d be happy with reimbursement of our expenses. That would be fine.
Jordan Schneider: Rick, congratulations. I hope you get yourself a championship belt, or at the very least, your expenses refunded. This was a pleasure. Thank you so much for being a part of ChinaTalk.
Rick Woldenberg: Thank you for having me on. This has been a great adventure.