On Wednesday, the Supreme Court will hear arguments on whether President Donald Trump exceeded his executive authority by invoking the International Emergency Economic Powers Act to implement his sweeping tariffs without congressional approval.

The outcome of the case, which could potentially unwind Trump’s core economic policy of levying tariffs on imported goods everywhere from Canada to China, will have all eyes on the highest court in the land, with significant legal, political and economic ramifications at stake.

“If the court holds against the president, which I think is a reasonable possibility, it’ll be one of the most significant Supreme Court rulings against presidential power ever,” Curtis Bradley, a University of Chicago law professor and an expert on executive authority, said Monday.

Meanwhile, 700 miles away, a family-owned north suburban Chicago educational toy company is at the center of the case after filing a lawsuit in April, arguing the tariffs are beyond the scope of the 1977 law that allows a president to regulate international commerce as an emergency response to a foreign threat.

Learning Resources and its sister company, hand2mind, which have 500 employees and a 1.1 million-square-foot warehouse at their Vernon Hills headquarters, said in the lawsuit the president’s tariffs are both unconstitutional and an “existential threat” to their businesses.

“The tariff policy became a fundamental threat to our ability to exist, and when faced with kind of do-or-die, we decided that we wanted to take action,” Elana Ruffman, vice president of marketing and product development at Learning Resources, told the Tribune. “We felt like we had legal grounds to stand on, and we wanted the courts to adjudicate.”

Learning Resources, which makes educational toys such as the Pretend & Play Cash Register and Kanoodle, outsources more than half of its manufacturing to China, according to Ruffman, a fourth-generation scion of the century-old family business.

In February, Trump signed an executive order invoking IEEPA and imposing a 10% tariff on all goods from China, which he upped to 20% in March. Trump briefly expanded his trade policy across the globe in April, roiling financial markets before pausing the tariffs for 90 days to every country except China.

On April 8, Trump raised the minimum tariff rate on all Chinese goods to a whopping 145% in an escalating trade war.

“When it went to 145% on China, it became an effective ban on our products,” Ruffman said.

On April 22, Learning Resources filed a lawsuit against Trump in a District of Columbia federal court, alleging the president exceeded his executive authority in implementing the tariffs — without congressional approval — by the novel use of the IEEPA statute. Learning Resources CEO Rick Woldenberg, a lawyer and Ruffman’s father, made the decision to sue the most powerful person in the world, going where larger corporations apparently feared to tread.

The district court ruled in favor of Learning Resources on May 29 and the government filed a notice of appeal the following day.

In a separate lawsuit, the Court of International Trade found in favor of several other small businesses, including VOS Selections, a New York wine importer, declaring the tariffs illegal and issuing a permanent injunction May 28.

The cases are now joined before the Supreme Court, with oral arguments scheduled for Wednesday.

Bradley, who has written extensively on foreign relations law and federal court jurisdiction, said the case will likely turn on the “major questions doctrine,” where the Supreme Court has previously required clear congressional authorization for such sweeping political and economic executive actions.

In 2023, for example, the Supreme Court used the doctrine to reject the Biden administration’s plan to forgive $400 billion in student loans.

“The Supreme Court has this major questions doctrine in recent years where it has said it does not assume that Congress, in vague statutes, intends to delegate away powers that have major economic or political significance,” Bradley said. “The argument against Trump is that this massive tariff authority he’s exercising is a major question, and the statute he’s invoking does not even mention the word tariffs.”

Under the major questions doctrine, attorneys for the plaintiffs will likely argue that if Congress had meant to give the president power to impose tariffs under the IEEPA, it would have explicitly stated, Bradley said.

At the same time, the emergency powers statute is very broad and open to interpretation, he said.

“It does say that he can regulate importation in an emergency, and it’s plausible that imposing tariffs is a type of regulation of importation,” Bradley said. “And usually courts defer a lot to presidents in the foreign affairs realm and in the emergency powers realm, and so his lawyers are asking for that sort of typical deference.”

With so much riding on the outcome, the political environment has amped up the pressure on the Supreme Court, Bradley said. Last month, Trump suggested he might attend the oral arguments, but subsequently decided against it.

Trump has nonetheless made his position on the matter clear, posting Sunday on Truth Social the country “could be reduced to almost Third World status” if he loses the case — and his ability to unilaterally impose tariffs.

“I will not be going to the Court on Wednesday in that I do not want to distract from the importance of this Decision,” Trump posted. “It will be, in my opinion, one of the most important and consequential Decisions ever made by the United States Supreme Court.”

For Learning Resources, the tariffs — and the concomitant uncertainty — have already proved costly. While Trump lowered the tariffs on China to 30% in May, and kept them there through two 90-day extensions, Ruffman projects that the import tax will add $12 million to the company’s production expenses in 2025.

At the beginning of the year, Learning Resources outsourced about 60% of its manufacturing to China. It has since reduced it by about 10%, Ruffman said.

The company, which has been diversifying its supply chain since the first Trump administration, has secondary manufacturing hubs in the U.S., Vietnam, Taiwan and India, and shifted hundreds of products to those other countries this year alone, Ruffman said.

But in June, increased costs from tariffs forced Learning Resources to raise prices across its product lines.

“It was mid-to-high single digits, depending on the brand, and it was basically the bare minimum that we needed to make sure that we could cover the cost,” Ruffman said.

The company also cut expenses by reducing its marketing spend, she said.

Learning Resources has 500 employees, including 375 who work out of the Vernon Hills facility, Ruffman said. It also has offices in Los Angeles and Buffalo, with other employees working remotely across the country.

So far, the company has avoided downsizing its workforce, despite the increased tariff costs.

“We haven’t done any layoffs,” Ruffman said. “That’s the very last thing that we want to do. We approach this issue as a community, and it’s very important to us that we can protect the jobs of the people who work for our company.”

A top-30 U.S. toy manufacturer, Ruffman declined to disclose annual revenues for the company. In a recently published industry report, Circana projects unit toy sales to fall by as much as 2.5% during November and December, citing a “complex retail landscape” shaped by economic pressures and tariff-related pricing adjustments.

For consumers, the Trump tariffs amount to an average tax increase of $1,200 per U.S. household in 2025, according to a report by the nonprofit Tax Foundation.

While Trump and China President Xi Jinping agreed last week to a one-year truce in their trade war, tariffs on imported Chinese toys are ostensibly set at 20%, up from zero during the Biden administration. With the wild swings in tariff rates this year, uncertainty still looms over the toy industry, and Learning Resources.

“As a business, particularly a manufacturer, I need to be able to plan in advance,” Ruffman said. “It’s very difficult for me to do that under these conditions, because I don’t know what my costs will be.”

The Supreme Court may provide that certainty after hearing the case Wednesday. But even an expedited decision likely won’t come before January, Bradley said.

While he believes the arguments against Trump’s tariffs are more compelling, Bradley said guessing the outcome is a “coin toss” at this point.

“I wouldn’t put money either way on this one,” Bradley said. “This is a really close legal case.”

For Learning Resources, which did invest its money in the case, suing Trump and rolling the dice on a favorable Supreme Court decision was worth every penny, Ruffman said.

“It is not cheap, but when you compare it to the cost of the tariffs, it’s a drop in the bucket,” she said.

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