As tariff fight reaches Supreme Court, Vernon Hills toy company looks to India for relief

Suburban toy company takes tariffs fight to the top

Locked in a legal battle over tariffs, a suburban toy company is taking their fight to the nation’s highest court.

VERNON HILLS, Ill. - Locked in a legal battle over tariffs, a suburban toy company is taking its fight to the nation’s highest court.

Last month, the Vernon Hills-based company—whose brands include Learning Resources and hand2mind—sued President Donald Trump and is now urging the U.S. Supreme Court to take up the case.

In the meantime, the toy makers are on the ground overseas—looking for new manufacturing sites to avoid inventory gaps and keep products on the shelves.

What we know:

On Tuesday, the family-owned business filed a petition with the high court, challenging Trump’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). 

A lower court previously ruled in the company’s favor, but the Trump administration is appealing the decision.

Instead of waiting for the appeals process to play out in lower courts, which could take several months, the company is seeking an expedited ruling from the Supreme Court.

What they're saying:

Ongoing uncertainty in the global supply chain is forcing businesses, like this one, to rethink how and where they source their products. If not, company executives say customers could end up paying the price.

"Over the last couple of months, we've made a feverish effort to re-source our supply chain, a supply chain that we built up over the course of about 40 years," said Stephen Woldenberg, senior vice president of sales at Learning Resources. 

On Wednesday, Woldenberg showed FOX 32 Chicago the company's 365,000-square-foot warehouse in Vernon Hills. 

"We are selling to over 100 countries around the world," Woldenberg said. 

Inside, their shelves are stocked—but shifting trade policies have executives bracing for supply issues. In response, Learning Resources and hand2mind are looking to shift some of their production out of China and into other markets. 

"It's unfortunate that the uncertainty created by this policy can impact availability heading into back-to-school and then again over the holiday season, so we're looking to do what we can to avoid that for our products and our brands, but it remains to be seen what can be done," Woldenberg explained. 

On Wednesday, Elana Ruffman, vice president of marketing and product development at hand2mind, was in India meeting with potential manufacturing partners amid ongoing efforts to diversify.

"I'm in Mumbai and I'll be here for the next week and a half visiting factories, a combination of existing factories and new ones," Ruffman shared in an interview with FOX 32 soon after she touched down overseas. 

Her trip comes as the company looks to avoid inventory gaps and price hikes.

"We make about 60% of our product in China and 40% are made in the rest the world. The challenge is that we just don't know what the tariffs are going to be. The executive branch is asserting that they have the ability to implement tariffs of any rate at any time," Ruffman said. "Then on top of that, moving forward, we just don't know what our costs are going to be. And you have to pay the tariff as soon as the product hits U.S. soil. I need cash to pay the tariff. I don't have time to sell it to a customer to get the money back to pay the tariff. I need to pay that tariff upfront and so it's a massive cash flow challenge."

Ruffman and Woldenberg hope that getting a jumpstart on re-sourcing now could help avoid consumer impact later. 

"We want to make sure that people can afford the products that they want to buy," Ruffman said. 

In the company's petition to the U.S. Supreme Court, it wrote: "No president—and let me just be very clear about this—no president in the history of our country has ever invoked tariff power under TWEA or IEEPA. That counts for something, whether you want to consider this a major questions case or just a simple case of statutory interpretation."

"This costs a lot of money and people are paying it right now today. We don't have several months to wait for this. There's a lot a damage being done to the economy," Ruffman said. 

What's next:

Ruffman shared that she will be meeting with 10 different partners over the next eight days in India.

The company is now waiting to find out whether the Supreme Court will agree to hear the case.