The lawsuit that will determine the fate of Trump's tariffs—trial begins Wednesday, with a small toy manufacturer as the plaintiff, while large companies are nowhere to be seen.

The lawsuit that will determine the fate of Trump's tariffs—trial begins Wednesday, with a small toy manufacturer as the plaintiff, while large companies are nowhere to be seen.

A legal challenge brought by a small toy manufacturer is set to push Trump’s signature tariff policies to a final ruling by the U.S. Supreme Court this week.

On Wednesday, November 5, the U.S. Supreme Court will hear a case centering on the legality of most tariffs implemented by President Trump since taking office. If the Court rules against Trump, it could overturn these signature tariff policies and potentially trigger over $100 billion in tariff refunds.

Trump himself is highly focused on the matter, calling it on social media on October 24 “the most important case ever.”

The latest development is that the Supreme Court will hear both sides’ arguments, focusing on whether the president overstepped his statutory authority. The lawsuit is led by Rick Woldenberg, owner of two toy companies—Learning Resources Inc. and hand2mind Inc. Meanwhile, the Supreme Court will also hear separate cases brought by five other small businesses and twelve states led by Democratic attorneys general.

However, in this high-stakes battle, the large importers most affected by the tariffs and paying the highest sums have remained unusually silent. Although the U.S. Chamber of Commerce opposes the tariffs, giants such as General Motors and Walmart have not joined the lawsuit, creating a stark “small business versus government” dynamic.

The Cost for Small Businesses

For plaintiff Rick Woldenberg, the lawsuit stems from real business pain. Woldenberg runs two educational toy companies near Chicago and says that the Trump administration’s unpredictable tariff policies have deeply hurt his business.

He cites a toy called “BubblePlush Yoga Ball Partners,” which was originally planned for production in China. According to Woldenberg, his team rushed to shift production to India this April.

However, when tariff policies dramatically changed again, the U.S. imposed higher tariffs on imports from India. His company raced to ship goods before the Indian tariff went effective, but ended up being six hours late, incurring a $50,000 penalty.

Woldenberg expects his company to pay $20 to $30 million in tariffs this year, far higher than last year’s $2.3 million.

The Absence of Big Companies

In this legal fight, the active participation of small businesses stands in stark contrast to the absence of large companies. Hundreds of small businesses have spoken out against the policy through the “We Pay the Tariffs” coalition.

Victor Schwartz, president of New York wine importer V.O.S. Selections Inc., said: “I’m shocked those with more power and funding haven’t stood up.”

Woldenberg also noted he took the lead after other companies considering lawsuits pulled out. He emphasized that, though he received anonymous donations to cover millions in legal costs, he would not accept help from non-Americans or anyone with political ties, saying, “I’m no one’s front.”

The core legal dispute centers on the limits of presidential power. The Trump administration asserts that the 1977 International Emergency Economic Powers Act (IEEPA) authorizes the president to take broad actions to address national security, foreign policy, and economic emergencies.

U.S. government lawyers say that the national trade deficit and the fentanyl crisis both constitute emergencies, allowing the president to invoke the law to levy tariffs. Federal attorney general D. John Sauer argued in court filings: “For the president, these cases offer a stark choice: with tariffs, we are a rich country; without them, we are a poor country.”

However, opponents point out that the U.S. Constitution gives Congress the power to levy taxes, and tariffs are essentially a tax. They argue that the IEEPA’s text does not mention “tariffs” or “taxes,” and even if the law allows the president to “regulate” imports, this does not equate to taxing authority.

Michael McConnell, a Stanford Law professor representing other small business lawsuits, said: “Without Congressional authorization, the president can’t levy taxes on U.S. citizens. And a tariff is a tax on U.S. importers.”

White House Defense and Backup Plans

The White House defended the tariff policy. Spokesman Kush Desai said the tariffs “have helped secure multiple trade agreements, created a level playing field for American workers and industry, and ensured trillions of dollars in domestic production and hiring in the U.S.”

Even so, the White House seems to be preparing for possible defeat. Press secretary Karoline Leavitt said on Fox News Sunday: “We do indeed have backup plans. The president’s trade team is working hard to draft these contingency plans.”

U.S. officials say that even if the government loses, most tariffs could be reimposed through more complex legal tools. Notably, this case does not directly affect Trump-era tariffs on steel, aluminum, and cars implemented under a separate law.

Risk Warning and DisclaimerThe market carries risk, and investment requires caution. This article does not constitute personal investment advice and does not take into account any specific user’s investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their unique circumstances. All investments based on this content are made at your own risk.