Tariffed: The Toymaker That Took on Trump Part Three

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Do you want to look at it number seven or do you want to look at something else? Okay, a clear one.

This summer, Dylan Brochar's four and seven year old daughters got hooked on a British cartoon that teaches kids about counting and math.

One bird, Hello bird, one tree, Hello tree.

The stars of Number Blocks are bright, playful characters built from stackable plastic blocks, with faces and hands that bring them to life. They've captured the imagination of young kids everywhere, including Dylan's youngest daughter.

She'll just sit and watch it and she'll sing the song because one and one.

Mate two another one is that's three.

It's calling for her.

The characters from Number Blocks are licensed by an American toy maker, Learning Resources, which produces the line of toys, and naturally, Dylan's daughter wanted a set of her own, like.

Any other consumer, would you know. I got on Google and found where to purchase them, and I think the cheapest set we could find it was just like a one, two and three blocks, so three little tiny toys. It was you know, twenty dollars and the smaller sets were twenty five thirty dollars each.

The price gave Dylan pause. He and his family live in what he calls the cornfields of Indiana. As a seventh grade science teacher, Dylan keeps a careful watch on the family spending. In June, Learning Resources raised prices on its toys by an average of six percent, which bumped most number blocks up by a few dollars. That may not seem like much, but for Dylan, who's seen costs of everything from groceries to toys climb this year, the increase was too steep.

You're getting less stuff for the same amount of money.

It's not in the budget to buy multiple sets of prices of toys that are, you know, continuing to go up the same way everything is.

The girls did get their number blocks, but it wasn't from Amazon or the stores.

Are you going to come helping me? Send it to the printer?

Baby, Dylan sat down at his computer, designed the characters himself, and printed them out on his home three D printer for a fraction of the price the amount.

Of plastic that I use on It's less than fifty cents for a little doll So it's it's crazy.

For Dylan, it was a thrifty hack to save money for learning resources. It's a troubling tipping point when prices climb too high. Some consumers don't just cut back, they walk away altogether. But the company felt it had no choice.

We did that to kind of balance the books, if you will.

Rick Woldenberg is the CEO of Learning Resources.

We raise prices middle single digits and we're trying to make that stick. By that, I mean we're trying to hold there. I really don't want a penny relating to tariffs that I don't.

Need, Rick says Learning Resources price increase was driven by President Donald Trump's tariff hikes.

Here is the deal that I will be offering to every major company and manufacture on Earth. I will give you the lowest taxes.

Since the start of his second term, President Trump has imposed sweeping tariffs, most notably on China, where most toys are made. The policy was billed as a way to boost US tax revenue and push brands to bring manufacturing back home, and Trump insists that foreign countries and companies would be the ones footing the bill. Here he is on c SPAN during his campaign.

A tariff is a tax or to foreign country that's the way it is, whether you like it and that a lot of people like to soil, or it's a tax or US No, no, no, it's a tax on a foreign country.

That's not the way things have turned out for Learning Resources. About half of its products are still made in China, where tariffs hit one hundred and forty five percent in April, though that's now been reduced to thirty one percent. The company has accelerated its shift from China to neighboring Vietnam, where exports to the US face a twenty percent levy. But tariffs aren't paid by the foreign factories that make

And that's actual cash out the door from US, not from China or India or Vietnam. No countries are paying it. We write the checks, we borrow the money from the bank, and send the money to the government.

In twenty twenty four, the company paid about two million dollars in tariffs. This year that's jumped to about fourteen million dollars. Like many American companies manufacturing overseas, Learning Resources front loaded inventory before higher levees took effect. That's helped it to avoid passing the full cost onto consumers. But that wasn't the only battle it took on. In April, the company took its fight to court, arguing the president

No American consumers should kid themselves as to who will pay this tax. We can't absorb it, and they're kidding themselves as they think that companies will absorb it. They will just pass it on, maybe not all in one go, but they will preserve their margin in order to remain viable. And that means foreign countries are not paying less tax and US companies will pass it along. So you know who's going to pay it you.

This is the big take Asia from Bloomberg News. I'm wanha. Over the past year, we followed an American toy company as it fled China and scrambled to rebuild its supply chains in Asia. Today, in our final chapter, we see what the tariff chaos looks like when it lands on American shores, when the bill finally comes due, and how one family owned toy maker is pushing back in the courts.

This warehouse is three hundred and fifty six thousand square feets. It's about a half mile around on the PREMI at her, so if you walked along the wall in a circle, that'd be about a half a mile.

Rick Woldenberg is taking us on a tour of what he calls his Shiny Penny in Burning Hills outside of Chicago. It's a warehouse the company built four years ago, and it holds nearly all of learning resources two thousand or so products. When you order one of the company's toys online the Noodle Puzzles or Botley the coating Robot, chances

So if you see she's wearing a headset, so that's voice to pick. And on her arm she has a little display, and on her finger she has a scanner. And then she just scanned the products, scans it out of its pation, scans it into the box.

As Rick shows off the plant's technology, he says he's frustrated by the Trump administration's narrative that companies importing goods into the US are somehow bad actors that don't invest at home, and that if you tax those companies heavily enough, they'll be forced to build factories in America.

Companies know that if they build in America, there are no tariffs, and that's why they're coming home to the USA in record numbers. They're building factories and plants and level.

The main thing that the Trump administration is trying to accomplish with tariffs is to make those goods from overseas more expensive, so that the companies rethink where they buy them from and source them in the US if they can.

Brendon Murray is Bloomberg's Global Trade editor. He spent much of the last year covering the Trade Board and its effect on global supply chains. He says, in some cases, President Trump's TARF policy show signs of their intended outcome.

We've seen pharmaceutical companies say that they are going to produce more drugs in the US, and so the effect is happening. It's just happening at a very slow pace

Rick says Trump's vision of bringing back manufacturing jobs may never materialize in his industry. That's because toy companies like his rely heavily on manual labor, actual human hands that braid doll hair, Teddy Bears, and solder electronics. For years, the company's production has been concentrated in China and other emerging markets where labor costs are lower. Rick says most toy companies made that pivot decades ago. Same goes for the fast network of suppliers the toy industry depends on

The jingoistic desire to have things made in the US is a sort of recurrent theme. It comes and it goes. And so for many years, at least ten, we've looked for any factory that would work with us to make anything so that we could cobble together a ten product range. We have over two thousand products, ten products that are made in the USA. So we go to a retailer and say, here, made in the USA. Can't do it. And so I firmly believe that there is no capacity

What learning resources can build in the US. Is this a high tech distribution center that maximizes automation. Inside conveyor belts move boxes that are tracked by software. The system knows exactly where boxes and exactly what needs to be filled for customers. Gigantic robotic arms the size of cars swing into action, Wrapping palettes in plastic.

The system is paperless, the HANT and we've been payperless since ninety nine and highly automated. I'll show you this pick module here is for ship ins of full cases.

And though his warehouse doesn't make any toys, Rick says it still represents a huge investment in the US that the White House unfairly dismisses.

This building's not free and stelf the Senate is not free, and like this is technology, and you know where this was made, of course in the United States. And there's probably a dozen pieces of software here that are talking to each other.

And guess where that comes from.

This is a high tech place.

It's just not what they have in mind.

But like, come on, isn't this an encouraged activity. Isn't this good? These people have jobs. They're good jobs too, or else they wouldn't work here.

Rick had plans to open an even bigger distribution center, doubling his footprint and adding scores of new employees, but those ambitions have been put on ice as he's been forced to divert funds from developing new projects to paying tariffs. And Rick says the tariffs haven't just affected the company's plans to expand and innovate. They've also eroded its existing business. As he walks us through the factory, Rick says he and his team have had to make tough decisions about

It's also sacrifice of new revenue, because as your backlist declines, you want to bring in new products to create new revenue opportunities. It's innovation, and our customers want new product. You don't go into a toy store and say, show me what's old.

Rick's decision to put new investments on hold while covering tariff costs first is one that many small and mid sized firms face. Brendan says, perhaps the biggest issue for companies big and small is the unpredictability of the policy fifty percent on India, new levies on Vietnam, renegotiated tariffs on China.

The officials that we have talked to would say privately, it's been chaotic. It's been it's kind of zigzagged back and forth between going full on with tariffs and scaling.

Them back and creating carve.

Outs and exclusions, and so the end result the administration would probably say, look, we have taken tariffs, which were essentially rarely used at the beginning of the second Trump administration, to something that is now kind of an everyday tool that the President has used, the stock market has gotten used to it, and it's just a matter of this adjustment that small companies in particular are going.

To have to go through.

In his shiny penny warehouse in Chicago, Rick says all of that disruption leaves him feeling like a nomad moving from one country to the next in search of a safe harbor where teriff rates won't threaten his company's survival.

We go from jurisdiction to jurisdiction, and no matter what we guess, it seems like it's wrong.

After the break, how the tariff shock waves have rippled out from China a Chicago warehouse and into storefronts, and how Learning Resources is fighting.

Back This one.

I love this one. This is by Learning Resources, and I love.

Kathleen Donahue owns Labyrinth Games and Puzzles in Washington, DC.

It's a speed dice rolling where you work on math skills, so you're rolling dice as fast as you can.

In Dice of Fury, Kathleen celebrating fifteen years in business, but she says this year has been a roller coaster.

It feels like every six months someone else hits me in the face. This year has been challenging, but also weirdly good.

Weirdly good because she feels the community is rallying to support small business, but the economics are getting tougher. Brands keep raising wholesale prices, and retailers can't pass all of that onto consumers without losing sales. She says there's a limit to what families are willing to spend.

I feel like people are now going twenty five to thirty dollars for a birthday present, but certainly we'd try not to carry very many games that go over that twenty five dollars.

Kathleen says she's seen inflation effect just about everyone lately, but it's been especially hard on younger families. In Washington, DC, we.

Had tons of people in the store playing games and stuff, but nobody was spending money, especially if they work for the federal government. When they shut down the government, you know, a lot of those people had to take loans to just live. They're certainly not going to be spending on games or puzzles like that's going to happen these days.

When Kathleen looks at the toy business, she sees an industry in disarray. She says, small board game makers, often mom and pop businesses, have been hit especially hard by the chaos. She's been caught in the tariff trap herself, paying board game publishers for goods that have never arrived.

They have my money. I have no games. Yes, there have been multiple things that I've already paid for that we're supposed to be here that aren't here because they can't ship them from China because they don't have enough money to pay the tariffs.

The math on her own business is getting brutal, and Kathleen says she's making a lot less overall.

The prices have gone up, the margins have gone down. Basically, it looks like our sales are up a little bit, but our margins are down by two to three percent across the board from this year this time to last year this time. But we've also just said we have to charge.

More earlier this year. Trump made headlines when he suggested the tariffs could mean fewer toys for American kids.

Maybe the children will have two dollars instead of thirty dollars, and maybe the two dolls will cost a couple of bucks more than they would normally.

Bloomberg's Brendan Murray says Trump and the White House are using tariffs to safeguard an American way of life that they feel is at risk, and higher prices for consumers is a trade off.

I think that's the administration's view, is that the American dream is not built around the ability to buy things as cheaply as possible. It's built around having a middle class job where you can educate your children's and have a home and live that sort of romanticized version of what Americans considered to be a prosperous lifestyle. And President Trump believes that's been lost and he's trying to regain that, and tariffs are the main tool that is using to do so.

Back at Learning Resources headquarters in Illinois, Slinenberg says he also wants to preserve the American dream that began with his grandfather. His granddad started the business more than one hundred years ago, and he and his children are running it. But Rick's now facing a reality he never imagined. Chaotic pricing the hibernation of products millions of dollars to move his supply chain.

And this is what happens for stops start, turn left, turn right, yo yo here yo yo. There is my life now.

In this April, Learning Resources sued Trump, arguing that the president doesn't have the constitutional authority to impose these taxes without congressional approval. Rick calls it taxation without representation.

I was pissed and the future of our company. You're talking about over one hundred years of a family business, which I see in the context of providing jobs to thousands of people who live in the Chicago area since nineteen sixteen and having a substantial impact on the community I live in. I was not point to passively allow this to be extinguished by politicians, and I thought this was unlawful, so I sighed, sue.

Suing the President of the United States isn't cheap. The legal fees are likely to total millions of dollars, and Rick's company is responsible for paying that bill. If Learning Resources wins, it could get a refund of millions of dollars in tariffs money that could restart those canceled product lines.

But if it loses I can tell you that, in my opinion, that is a horrific outcome that every American should lose sleepover. It would affect people's faith in rule of law. And if you doubt rule of law, you also doubt whether your personal freedoms will be respected, and the whole concept of the country unravels.

The Global trade War has reshaped the world map, moving factories from China to Vietnam, India and other emerging countries, but the shock waves have also hit home in West Lafayette, Indiana. Inside Dylan Bushar's living room, Dylan's daughter has autism and for her, toys like number blocks aren't just playthings.

It's comfortable for her.

I don't know if that makes sense, but like if she's overwhelmed, if she's you know, overstimulated, which is what happens to her oftentimes, like number blocks will like calm her heart rate. Now, like she'll set in my lab. I'll hold her. I can feel her heart beating slower.

You know.

It's just it's something she's she knows and she's comfortable with and she's learning.

Dylan was able to make his own version of number blocks, but he knows not every family has that option. For some, the choice comes down to a twenty five dollars toy or putting food on the table. And while he sidesteps expense by three D printing sum toys, Dylan says the decision to wage tariff wars weighs heavily on families like his. He can see the impact of tariffs just by looking at his plans for the holidays. Things are going to be a lot less Christmasy this year.

For the girls because we spent the same amount of money as we always do.

We just have less stuff.

You know, it's still going to be Christmas more, He's still going to be presents to open, but it's noticeable what a dollar is going.

To buy you.

So it sounds like there's going to be less presence underneath the Christmas tree this year, even though you're spending just as much.

Yeah, we didn't need to start a second ring around, Like you know, there's no stacking. It's just a it's a donut, so there's no there's no third dimension to it.

This is the big take Asia from Bloomberg News. I'm Wanha. We followed learning recent sources from the factory floor in Vietnam and India to the Supreme Court. You can listen to the full series wherever you get your podcasts. The show is hosted by Me, David Gura, and Sarah Holder. The show is made by Aaron Edwards, David Fox, Jeff Grocott, Eleanor Harrison Dengate, Patty hirsh Rachel Lewis, Krisky, Katie mcmurranmi Um, Julia Press, Tracy Samuelson, Naomi Shaven, Alex Sugiia, Julia Weaver,