WEBVTT - Doing the Math on Toy Tariffs 0:00:02.720 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:10.080 --> 0:00:11.760 Do you want to look at it number seven or 0:00:11.800 --> 0:00:16.400 do you want to look at something else? Okay, a 0:00:16.520 --> 0:00:19.520 clear one. 0:00:19.880 --> 0:00:23.239 This summer, Dylan Brochar's four and seven year old daughters 0:00:23.320 --> 0:00:26.440 got hooked on a British cartoon that teaches kids about 0:00:26.440 --> 0:00:27.479 counting and math. 0:00:27.960 --> 0:00:33.880 One bird, Hello bird, one tree, Hello tree. 0:00:34.320 --> 0:00:37.720 The stars of Number Blocks are bright, playful characters built 0:00:37.760 --> 0:00:41.319 from stackable plastic blocks, with faces and hands that bring 0:00:41.400 --> 0:00:45.200 them to life. They've captured the imagination of young kids everywhere, 0:00:45.479 --> 0:00:47.360 including Dylan's youngest daughter. 0:00:47.920 --> 0:00:52.040 She'll just sit and watch it and she'll sing the 0:00:52.080 --> 0:00:53.440 song because one and one. 0:00:53.280 --> 0:00:57.120 Mate two another one is that's three. 0:00:58.400 --> 0:00:59.400 It's calling for her. 0:01:03.680 --> 0:01:06.520 The characters from Number Blocks are licensed by an American 0:01:06.560 --> 0:01:10.160 toy maker, Learning Resources, which produces the line of toys, 0:01:10.840 --> 0:01:15.479 and naturally, Dylan's daughter wanted a set of her own, like. 0:01:15.520 --> 0:01:19.360 Any other consumer, would you know. I got on Google 0:01:19.720 --> 0:01:22.800 and found where to purchase them, and I think the 0:01:22.920 --> 0:01:25.720 cheapest set we could find it was just like a one, 0:01:25.880 --> 0:01:29.080 two and three blocks, so three little tiny toys. It 0:01:29.160 --> 0:01:32.160 was you know, twenty dollars and the smaller sets were 0:01:32.640 --> 0:01:34.440 twenty five thirty dollars each. 0:01:35.319 --> 0:01:38.880 The price gave Dylan pause. He and his family live 0:01:38.920 --> 0:01:42.200 in what he calls the cornfields of Indiana. As a 0:01:42.240 --> 0:01:45.399 seventh grade science teacher, Dylan keeps a careful watch on 0:01:45.440 --> 0:01:49.800 the family spending. In June, Learning Resources raised prices on 0:01:49.840 --> 0:01:52.960 its toys by an average of six percent, which bumped 0:01:53.000 --> 0:01:56.120 most number blocks up by a few dollars. That may 0:01:56.120 --> 0:01:58.880 not seem like much, but for Dylan, who's seen costs 0:01:58.920 --> 0:02:02.600 of everything from groceries to toys climb this year, the 0:02:02.720 --> 0:02:04.200 increase was too steep. 0:02:04.600 --> 0:02:06.840 You're getting less stuff for the same amount of money. 0:02:07.200 --> 0:02:10.840 It's not in the budget to buy multiple sets of 0:02:11.200 --> 0:02:14.640 prices of toys that are, you know, continuing to go 0:02:14.760 --> 0:02:16.040 up the same way everything is. 0:02:17.520 --> 0:02:20.359 The girls did get their number blocks, but it wasn't 0:02:20.400 --> 0:02:22.040 from Amazon or the stores. 0:02:23.280 --> 0:02:24.480 Are you going to come helping me? Send it to 0:02:24.480 --> 0:02:24.800 the printer? 0:02:24.880 --> 0:02:29.560 Baby, Dylan sat down at his computer, designed the characters himself, 0:02:29.880 --> 0:02:32.480 and printed them out on his home three D printer 0:02:33.040 --> 0:02:35.760 for a fraction of the price the amount. 0:02:35.520 --> 0:02:38.040 Of plastic that I use on It's less than fifty 0:02:38.120 --> 0:02:42.280 cents for a little doll So it's it's crazy. 0:02:42.440 --> 0:02:45.160 For Dylan, it was a thrifty hack to save money 0:02:45.600 --> 0:02:49.760 for learning resources. It's a troubling tipping point when prices 0:02:49.800 --> 0:02:53.079 climb too high. Some consumers don't just cut back, they 0:02:53.120 --> 0:02:59.120 walk away altogether. But the company felt it had no choice. 0:02:59.400 --> 0:03:01.720 We did that to kind of balance the books, if 0:03:01.720 --> 0:03:02.160 you will. 0:03:02.760 --> 0:03:05.720 Rick Woldenberg is the CEO of Learning Resources. 0:03:06.120 --> 0:03:10.480 We raise prices middle single digits and we're trying to 0:03:10.680 --> 0:03:13.680 make that stick. By that, I mean we're trying to 0:03:13.840 --> 0:03:18.560 hold there. I really don't want a penny relating to 0:03:18.639 --> 0:03:19.920 tariffs that I don't. 0:03:19.760 --> 0:03:24.320 Need, Rick says Learning Resources price increase was driven by 0:03:24.320 --> 0:03:26.280 President Donald Trump's tariff hikes. 0:03:26.760 --> 0:03:29.160 Here is the deal that I will be offering to 0:03:29.280 --> 0:03:32.560 every major company and manufacture on Earth. I will give 0:03:32.600 --> 0:03:35.320 you the lowest taxes. 0:03:35.440 --> 0:03:38.040 Since the start of his second term, President Trump has 0:03:38.040 --> 0:03:42.240 imposed sweeping tariffs, most notably on China, where most toys 0:03:42.280 --> 0:03:45.280 are made. The policy was billed as a way to 0:03:45.320 --> 0:03:49.320 boost US tax revenue and push brands to bring manufacturing 0:03:49.480 --> 0:03:53.520 back home, and Trump insists that foreign countries and companies 0:03:53.560 --> 0:03:56.120 would be the ones footing the bill. Here he is 0:03:56.160 --> 0:03:57.920 on c SPAN during his campaign. 0:03:58.600 --> 0:04:02.080 A tariff is a tax or to foreign country that's 0:04:02.120 --> 0:04:03.440 the way it is, whether you like it and that 0:04:03.520 --> 0:04:04.800 a lot of people like to soil, or it's a 0:04:04.920 --> 0:04:08.240 tax or US No, no, no, it's a tax on 0:04:08.360 --> 0:04:09.800 a foreign country. 0:04:10.400 --> 0:04:13.119 That's not the way things have turned out for Learning Resources. 0:04:13.480 --> 0:04:16.160 About half of its products are still made in China, 0:04:16.520 --> 0:04:19.960 where tariffs hit one hundred and forty five percent in April, 0:04:19.960 --> 0:04:22.560 though that's now been reduced to thirty one percent. The 0:04:22.640 --> 0:04:26.800 company has accelerated its shift from China to neighboring Vietnam, 0:04:27.080 --> 0:04:30.000 where exports to the US face a twenty percent levy. 0:04:30.640 --> 0:04:33.839 But tariffs aren't paid by the foreign factories that make 0:04:33.880 --> 0:04:37.600 the toys. They're paid by the importer when goods are 0:04:37.640 --> 0:04:41.839 brought into the US, in this case Learning Resources. 0:04:41.760 --> 0:04:46.919 And that's actual cash out the door from US, not 0:04:47.040 --> 0:04:52.080 from China or India or Vietnam. No countries are paying it. 0:04:52.800 --> 0:04:56.080 We write the checks, we borrow the money from the bank, 0:04:56.240 --> 0:04:57.599 and send the money to the government. 0:04:58.800 --> 0:05:01.760 In twenty twenty four, the company paid about two million 0:05:01.800 --> 0:05:05.760 dollars in tariffs. This year that's jumped to about fourteen 0:05:05.800 --> 0:05:11.640 million dollars. Like many American companies manufacturing overseas, Learning Resources 0:05:11.800 --> 0:05:16.200 front loaded inventory before higher levees took effect. That's helped 0:05:16.200 --> 0:05:20.039 it to avoid passing the full cost onto consumers. But 0:05:20.120 --> 0:05:23.200 that wasn't the only battle it took on. In April, 0:05:23.279 --> 0:05:26.240 the company took its fight to court, arguing the president 0:05:26.360 --> 0:05:30.520 lacked authority to impose tariffs. The case now sits before 0:05:30.560 --> 0:05:33.720 the Supreme Court. Rick is hopeful the court will rule 0:05:33.720 --> 0:05:37.960 the tariffs illegal, but if it upholds administration's levees, he 0:05:38.040 --> 0:05:41.080 says his company won't be able to hold on much longer. 0:05:41.960 --> 0:05:45.920 No American consumers should kid themselves as to who will 0:05:45.960 --> 0:05:50.560 pay this tax. We can't absorb it, and they're kidding 0:05:50.600 --> 0:05:53.800 themselves as they think that companies will absorb it. They 0:05:53.800 --> 0:05:57.320 will just pass it on, maybe not all in one go, 0:05:57.839 --> 0:06:01.839 but they will preserve their margin in order to remain viable. 0:06:02.400 --> 0:06:05.719 And that means foreign countries are not paying less tax 0:06:06.200 --> 0:06:10.520 and US companies will pass it along. So you know 0:06:10.560 --> 0:06:12.120 who's going to pay it you. 0:06:18.640 --> 0:06:21.799 This is the big take Asia from Bloomberg News. I'm wanha. 0:06:22.680 --> 0:06:25.560 Over the past year, we followed an American toy company 0:06:25.640 --> 0:06:28.680 as it fled China and scrambled to rebuild its supply 0:06:28.800 --> 0:06:32.520 chains in Asia. Today, in our final chapter, we see 0:06:32.560 --> 0:06:35.359 what the tariff chaos looks like when it lands on 0:06:35.440 --> 0:06:39.880 American shores, when the bill finally comes due, and how 0:06:39.920 --> 0:06:48.160 one family owned toy maker is pushing back in the courts. 0:06:53.600 --> 0:06:56.640 This warehouse is three hundred and fifty six thousand square feets. 0:06:57.200 --> 0:07:00.280 It's about a half mile around on the PREMI at her, 0:07:00.520 --> 0:07:03.039 so if you walked along the wall in a circle, 0:07:03.600 --> 0:07:04.880 that'd be about a half a mile. 0:07:06.960 --> 0:07:09.400 Rick Woldenberg is taking us on a tour of what 0:07:09.480 --> 0:07:13.200 he calls his Shiny Penny in Burning Hills outside of Chicago. 0:07:13.840 --> 0:07:16.560 It's a warehouse the company built four years ago, and 0:07:16.640 --> 0:07:19.920 it holds nearly all of learning resources two thousand or 0:07:19.960 --> 0:07:22.840 so products. When you order one of the company's toys 0:07:22.840 --> 0:07:26.480 online the Noodle Puzzles or Botley the coating Robot, chances 0:07:26.520 --> 0:07:31.760 are it will come through here. The space stretches out 0:07:31.800 --> 0:07:35.600 like a canyon, and Bayer belt crisscross the floor, while 0:07:35.680 --> 0:07:38.920 shelves stacked more than thirty feet high are loaded with pallets. 0:07:39.840 --> 0:07:42.560 On the floor, a worker moves through the aisles, pulling 0:07:42.640 --> 0:07:46.080 individual toys from the shelves and packing them into cardboard 0:07:46.120 --> 0:07:48.240 boxes that make their way through the factory. 0:07:50.080 --> 0:07:52.320 So if you see she's wearing a headset, so that's 0:07:52.480 --> 0:07:54.400 voice to pick. And on her arm she has a 0:07:54.400 --> 0:07:57.680 little display, and on her finger she has a scanner. 0:07:58.080 --> 0:08:02.480 And then she just scanned the products, scans it out 0:08:02.560 --> 0:08:04.720 of its pation, scans it into the box. 0:08:04.880 --> 0:08:07.960 As Rick shows off the plant's technology, he says he's 0:08:08.040 --> 0:08:12.880 frustrated by the Trump administration's narrative that companies importing goods 0:08:12.920 --> 0:08:16.720 into the US are somehow bad actors that don't invest 0:08:16.800 --> 0:08:20.160 at home, and that if you tax those companies heavily enough, 0:08:20.440 --> 0:08:23.200 they'll be forced to build factories in America. 0:08:23.760 --> 0:08:26.920 Companies know that if they build in America, there are 0:08:26.960 --> 0:08:30.000 no tariffs, and that's why they're coming home to the 0:08:30.080 --> 0:08:34.920 USA in record numbers. They're building factories and plants and level. 0:08:35.080 --> 0:08:37.680 The main thing that the Trump administration is trying to 0:08:37.720 --> 0:08:41.720 accomplish with tariffs is to make those goods from overseas 0:08:41.760 --> 0:08:45.400 more expensive, so that the companies rethink where they buy 0:08:45.440 --> 0:08:48.160 them from and source them in the US if they can. 0:08:48.800 --> 0:08:52.480 Brendon Murray is Bloomberg's Global Trade editor. He spent much 0:08:52.480 --> 0:08:54.720 of the last year covering the Trade Board and its 0:08:54.760 --> 0:08:58.440 effect on global supply chains. He says, in some cases, 0:08:58.640 --> 0:09:02.679 President Trump's TARF policy show signs of their intended outcome. 0:09:03.200 --> 0:09:06.440 We've seen pharmaceutical companies say that they are going to 0:09:06.480 --> 0:09:11.880 produce more drugs in the US, and so the effect 0:09:12.240 --> 0:09:16.080 is happening. It's just happening at a very slow pace 0:09:16.480 --> 0:09:19.480 and not a huge scale at this point. The big 0:09:19.559 --> 0:09:22.560 question really is how much of it is going to 0:09:22.600 --> 0:09:26.680 be these kinds of good paying factory jobs that the 0:09:26.720 --> 0:09:29.880 administration thinks they're going to create, or are these a 0:09:29.920 --> 0:09:33.120 lot of these going to be data centers and not 0:09:33.320 --> 0:09:37.960 very labor intensive facilities that don't create this renaissance of 0:09:38.120 --> 0:09:42.240 manufacturing jobs that the administration has pledged they're going to 0:09:42.240 --> 0:09:45.240 try to accomplish. 0:09:45.840 --> 0:09:49.600 Rick says Trump's vision of bringing back manufacturing jobs may 0:09:49.679 --> 0:09:54.040 never materialize in his industry. That's because toy companies like 0:09:54.080 --> 0:09:58.400 his rely heavily on manual labor, actual human hands that 0:09:58.480 --> 0:10:03.160 braid doll hair, Teddy Bears, and solder electronics. For years, 0:10:03.200 --> 0:10:06.240 the company's production has been concentrated in China and other 0:10:06.240 --> 0:10:09.840 emerging markets where labor costs are lower. Rick says most 0:10:09.880 --> 0:10:13.360 toy companies made that pivot decades ago. Same goes for 0:10:13.440 --> 0:10:16.559 the fast network of suppliers the toy industry depends on 0:10:17.000 --> 0:10:21.200 everything from plastics to electronics. The stuffing and rebuilding that 0:10:21.280 --> 0:10:25.080 infrastructure here, he argues, just wouldn't make financial sense. 0:10:25.800 --> 0:10:29.720 The jingoistic desire to have things made in the US 0:10:30.000 --> 0:10:34.840 is a sort of recurrent theme. It comes and it goes. 0:10:35.640 --> 0:10:38.800 And so for many years, at least ten, we've looked 0:10:38.840 --> 0:10:42.960 for any factory that would work with us to make 0:10:43.160 --> 0:10:48.600 anything so that we could cobble together a ten product range. 0:10:48.720 --> 0:10:51.920 We have over two thousand products, ten products that are 0:10:51.920 --> 0:10:54.040 made in the USA. So we go to a retailer 0:10:54.040 --> 0:10:57.920 and say, here, made in the USA. Can't do it. 0:10:58.520 --> 0:11:02.120 And so I firmly believe that there is no capacity 0:11:02.160 --> 0:11:04.320 to make the kinds of products that we make. We're 0:11:04.320 --> 0:11:06.040 going to stay in this business. We can't make the 0:11:06.080 --> 0:11:08.000 stuff in the US. Nobody wants to make it. 0:11:10.679 --> 0:11:13.840 What learning resources can build in the US. Is this 0:11:14.600 --> 0:11:20.200 a high tech distribution center that maximizes automation. Inside conveyor 0:11:20.240 --> 0:11:23.680 belts move boxes that are tracked by software. The system 0:11:23.720 --> 0:11:26.960 knows exactly where boxes and exactly what needs to be 0:11:27.000 --> 0:11:31.040 filled for customers. Gigantic robotic arms the size of cars 0:11:31.120 --> 0:11:34.480 swing into action, Wrapping palettes in plastic. 0:11:36.400 --> 0:11:40.640 The system is paperless, the HANT and we've been payperless 0:11:40.679 --> 0:11:46.120 since ninety nine and highly automated. I'll show you this 0:11:46.280 --> 0:11:49.280 pick module here is for ship ins of full cases. 0:11:50.200 --> 0:11:53.920 And though his warehouse doesn't make any toys, Rick says 0:11:54.000 --> 0:11:57.440 it still represents a huge investment in the US that 0:11:57.520 --> 0:11:59.559 the White House unfairly dismisses. 0:12:00.160 --> 0:12:03.839 This building's not free and stelf the Senate is not free, 0:12:03.960 --> 0:12:06.480 and like this is technology, and you know where this 0:12:06.679 --> 0:12:10.760 was made, of course in the United States. And there's 0:12:10.800 --> 0:12:13.720 probably a dozen pieces of software here that are talking 0:12:13.760 --> 0:12:14.280 to each other. 0:12:14.800 --> 0:12:16.480 And guess where that comes from. 0:12:16.960 --> 0:12:18.640 This is a high tech place. 0:12:19.160 --> 0:12:21.000 It's just not what they have in mind. 0:12:21.720 --> 0:12:26.000 But like, come on, isn't this an encouraged activity. Isn't 0:12:26.000 --> 0:12:29.280 this good? These people have jobs. They're good jobs too, 0:12:29.440 --> 0:12:30.680 or else they wouldn't work here. 0:12:34.320 --> 0:12:37.640 Rick had plans to open an even bigger distribution center, 0:12:38.000 --> 0:12:41.640 doubling his footprint and adding scores of new employees, but 0:12:41.840 --> 0:12:44.520 those ambitions have been put on ice as he's been 0:12:44.559 --> 0:12:48.600 forced to divert funds from developing new projects to paying tariffs. 0:12:49.360 --> 0:12:52.320 And Rick says the tariffs haven't just affected the company's 0:12:52.360 --> 0:12:57.160 plans to expand and innovate. They've also eroded its existing business. 0:12:57.720 --> 0:12:59.920 As he walks us through the factory, Rick says he 0:13:00.080 --> 0:13:03.040 and his team have had to make tough decisions about 0:13:03.080 --> 0:13:07.280 which products deserve space on the shelves. Some simply don't 0:13:07.280 --> 0:13:08.280 make the cut anymore. 0:13:09.080 --> 0:13:15.440 It's also sacrifice of new revenue, because as your backlist declines, 0:13:15.480 --> 0:13:17.440 you want to bring in new products to create new 0:13:17.520 --> 0:13:21.720 revenue opportunities. It's innovation, and our customers want new product. 0:13:22.240 --> 0:13:24.560 You don't go into a toy store and say, show 0:13:24.600 --> 0:13:25.280 me what's old. 0:13:27.480 --> 0:13:30.840 Rick's decision to put new investments on hold while covering 0:13:30.880 --> 0:13:34.360 tariff costs first is one that many small and mid 0:13:34.400 --> 0:13:38.199 sized firms face. Brendan says, perhaps the biggest issue for 0:13:38.280 --> 0:13:42.280 companies big and small is the unpredictability of the policy 0:13:43.040 --> 0:13:47.559 fifty percent on India, new levies on Vietnam, renegotiated tariffs 0:13:47.640 --> 0:13:48.240 on China. 0:13:48.840 --> 0:13:51.480 The officials that we have talked to would say privately, 0:13:51.559 --> 0:13:54.959 it's been chaotic. It's been it's kind of zigzagged back 0:13:55.040 --> 0:14:00.160 and forth between going full on with tariffs and scaling. 0:13:59.800 --> 0:14:01.559 Them back and creating carve. 0:14:01.360 --> 0:14:06.400 Outs and exclusions, and so the end result the administration 0:14:06.480 --> 0:14:10.199 would probably say, look, we have taken tariffs, which were 0:14:10.320 --> 0:14:15.080 essentially rarely used at the beginning of the second Trump administration, 0:14:15.200 --> 0:14:17.840 to something that is now kind of an everyday tool 0:14:17.920 --> 0:14:21.040 that the President has used, the stock market has gotten 0:14:21.120 --> 0:14:23.360 used to it, and it's just a matter of this 0:14:23.480 --> 0:14:26.680 adjustment that small companies in particular are going. 0:14:26.680 --> 0:14:27.600 To have to go through. 0:14:30.320 --> 0:14:34.240 In his shiny penny warehouse in Chicago, Rick says all 0:14:34.280 --> 0:14:38.040 of that disruption leaves him feeling like a nomad moving 0:14:38.040 --> 0:14:40.440 from one country to the next in search of a 0:14:40.440 --> 0:14:44.160 safe harbor where teriff rates won't threaten his company's survival. 0:14:44.760 --> 0:14:47.720 We go from jurisdiction to jurisdiction, and no matter what 0:14:47.760 --> 0:14:49.720 we guess, it seems like it's wrong. 0:14:55.480 --> 0:14:58.600 After the break, how the tariff shock waves have rippled 0:14:58.600 --> 0:15:03.360 out from China a Chicago warehouse and into storefronts, and 0:15:03.440 --> 0:15:05.920 how Learning Resources is fighting. 0:15:05.560 --> 0:15:19.680 Back This one. 0:15:19.880 --> 0:15:24.520 I love this one. This is by Learning Resources, and 0:15:24.760 --> 0:15:25.480 I love. 0:15:26.160 --> 0:15:30.000 Kathleen Donahue owns Labyrinth Games and Puzzles in Washington, DC. 0:15:30.960 --> 0:15:34.120 It's a speed dice rolling where you work on math skills, 0:15:34.400 --> 0:15:36.520 so you're rolling dice as fast as you can. 0:15:36.680 --> 0:15:40.440 In Dice of Fury, Kathleen celebrating fifteen years in business, 0:15:40.680 --> 0:15:43.560 but she says this year has been a roller coaster. 0:15:44.240 --> 0:15:47.680 It feels like every six months someone else hits me 0:15:47.720 --> 0:15:52.920 in the face. This year has been challenging, but also 0:15:53.760 --> 0:15:54.720 weirdly good. 0:15:55.640 --> 0:15:58.960 Weirdly good because she feels the community is rallying to 0:15:58.960 --> 0:16:03.680 support small business, but the economics are getting tougher. Brands 0:16:03.760 --> 0:16:07.640 keep raising wholesale prices, and retailers can't pass all of 0:16:07.640 --> 0:16:11.520 that onto consumers without losing sales. She says there's a 0:16:11.600 --> 0:16:13.800 limit to what families are willing to spend. 0:16:14.680 --> 0:16:18.200 I feel like people are now going twenty five to 0:16:18.320 --> 0:16:22.680 thirty dollars for a birthday present, but certainly we'd try 0:16:22.720 --> 0:16:26.640 not to carry very many games that go over that 0:16:26.680 --> 0:16:27.640 twenty five dollars. 0:16:28.040 --> 0:16:31.640 Kathleen says she's seen inflation effect just about everyone lately, 0:16:32.080 --> 0:16:36.360 but it's been especially hard on younger families. In Washington, DC, we. 0:16:36.360 --> 0:16:39.040 Had tons of people in the store playing games and stuff, 0:16:39.040 --> 0:16:41.840 but nobody was spending money, especially if they work for 0:16:41.880 --> 0:16:44.880 the federal government. When they shut down the government, you know, 0:16:45.000 --> 0:16:47.040 a lot of those people had to take loans to 0:16:47.200 --> 0:16:50.320 just live. They're certainly not going to be spending on 0:16:51.120 --> 0:16:54.960 games or puzzles like that's going to happen these days. 0:16:55.000 --> 0:16:57.600 When Kathleen looks at the toy business, she sees an 0:16:57.600 --> 0:17:01.800 industry in disarray. She says, small board game makers, often 0:17:01.880 --> 0:17:05.080 mom and pop businesses, have been hit especially hard by 0:17:05.119 --> 0:17:08.320 the chaos. She's been caught in the tariff trap herself, 0:17:08.480 --> 0:17:11.720 paying board game publishers for goods that have never arrived. 0:17:12.119 --> 0:17:15.760 They have my money. I have no games. Yes, there 0:17:15.800 --> 0:17:19.480 have been multiple things that I've already paid for that 0:17:19.840 --> 0:17:22.520 we're supposed to be here that aren't here because they 0:17:22.560 --> 0:17:25.720 can't ship them from China because they don't have enough 0:17:25.760 --> 0:17:27.200 money to pay the tariffs. 0:17:27.600 --> 0:17:30.520 The math on her own business is getting brutal, and 0:17:30.600 --> 0:17:33.440 Kathleen says she's making a lot less overall. 0:17:34.040 --> 0:17:38.200 The prices have gone up, the margins have gone down. Basically, 0:17:38.440 --> 0:17:40.399 it looks like our sales are up a little bit, 0:17:40.640 --> 0:17:43.600 but our margins are down by two to three percent 0:17:43.760 --> 0:17:47.840 across the board from this year this time to last 0:17:47.920 --> 0:17:50.880 year this time. But we've also just said we have 0:17:51.000 --> 0:17:52.360 to charge. 0:17:52.040 --> 0:17:56.840 More earlier this year. Trump made headlines when he suggested 0:17:56.920 --> 0:18:00.439 the tariffs could mean fewer toys for American kids. 0:18:01.119 --> 0:18:04.040 Maybe the children will have two dollars instead of thirty dollars, 0:18:05.160 --> 0:18:07.119 and maybe the two dolls will cost a couple of 0:18:07.119 --> 0:18:08.399 bucks more than they would normally. 0:18:08.560 --> 0:18:11.639 Bloomberg's Brendan Murray says Trump and the White House are 0:18:11.760 --> 0:18:15.280 using tariffs to safeguard an American way of life that 0:18:15.359 --> 0:18:19.320 they feel is at risk, and higher prices for consumers 0:18:19.600 --> 0:18:20.320 is a trade off. 0:18:21.000 --> 0:18:23.960 I think that's the administration's view, is that the American 0:18:24.040 --> 0:18:27.040 dream is not built around the ability to buy things 0:18:27.280 --> 0:18:30.919 as cheaply as possible. It's built around having a middle 0:18:30.920 --> 0:18:34.320 class job where you can educate your children's and have 0:18:34.440 --> 0:18:38.359 a home and live that sort of romanticized version of 0:18:38.400 --> 0:18:43.640 what Americans considered to be a prosperous lifestyle. And President 0:18:43.640 --> 0:18:47.520 Trump believes that's been lost and he's trying to regain that, 0:18:47.760 --> 0:18:50.000 and tariffs are the main tool that is using to 0:18:50.040 --> 0:18:56.240 do so. 0:18:56.600 --> 0:19:01.120 Back at Learning Resources headquarters in Illinois, Slinenberg says he 0:19:01.160 --> 0:19:04.240 also wants to preserve the American dream that began with 0:19:04.320 --> 0:19:07.560 his grandfather. His granddad started the business more than one 0:19:07.600 --> 0:19:10.520 hundred years ago, and he and his children are running it. 0:19:11.080 --> 0:19:14.960 But Rick's now facing a reality he never imagined. Chaotic 0:19:15.000 --> 0:19:19.000 pricing the hibernation of products millions of dollars to move 0:19:19.040 --> 0:19:19.840 his supply chain. 0:19:20.560 --> 0:19:24.240 And this is what happens for stops start, turn left, 0:19:24.280 --> 0:19:27.439 turn right, yo yo here yo yo. There is my 0:19:27.600 --> 0:19:28.200 life now. 0:19:29.119 --> 0:19:33.679 In this April, Learning Resources sued Trump, arguing that the 0:19:33.680 --> 0:19:37.760 president doesn't have the constitutional authority to impose these taxes 0:19:37.960 --> 0:19:42.920 without congressional approval. Rick calls it taxation without representation. 0:19:43.400 --> 0:19:47.680 I was pissed and the future of our company. You're 0:19:47.680 --> 0:19:49.920 talking about over one hundred years of a family business, 0:19:50.000 --> 0:19:53.920 which I see in the context of providing jobs to 0:19:54.040 --> 0:19:56.840 thousands of people who live in the Chicago area since 0:19:56.920 --> 0:20:00.840 nineteen sixteen and having a substantial impact on the community 0:20:00.920 --> 0:20:05.040 I live in. I was not point to passively allow 0:20:05.119 --> 0:20:09.439 this to be extinguished by politicians, and I thought this 0:20:09.600 --> 0:20:12.880 was unlawful, so I sighed, sue. 0:20:13.600 --> 0:20:16.560 Suing the President of the United States isn't cheap. The 0:20:16.680 --> 0:20:20.080 legal fees are likely to total millions of dollars, and 0:20:20.240 --> 0:20:24.240 Rick's company is responsible for paying that bill. If Learning 0:20:24.280 --> 0:20:27.359 Resources wins, it could get a refund of millions of 0:20:27.400 --> 0:20:31.679 dollars in tariffs money that could restart those canceled product lines. 0:20:32.200 --> 0:20:37.800 But if it loses I can tell you that, in 0:20:37.800 --> 0:20:42.440 my opinion, that is a horrific outcome that every American 0:20:42.560 --> 0:20:47.080 should lose sleepover. It would affect people's faith in rule 0:20:47.119 --> 0:20:51.639 of law. And if you doubt rule of law, you 0:20:51.760 --> 0:20:55.000 also doubt whether your personal freedoms will be respected, and 0:20:55.040 --> 0:20:58.640 the whole concept of the country unravels. 0:21:00.160 --> 0:21:03.439 The Global trade War has reshaped the world map, moving 0:21:03.520 --> 0:21:07.560 factories from China to Vietnam, India and other emerging countries, 0:21:08.000 --> 0:21:12.080 but the shock waves have also hit home in West Lafayette, Indiana. 0:21:12.800 --> 0:21:17.399 Inside Dylan Bushar's living room, Dylan's daughter has autism and 0:21:17.480 --> 0:21:20.760 for her, toys like number blocks aren't just playthings. 0:21:21.280 --> 0:21:22.600 It's comfortable for her. 0:21:23.040 --> 0:21:26.040 I don't know if that makes sense, but like if 0:21:26.040 --> 0:21:29.399 she's overwhelmed, if she's you know, overstimulated, which is what 0:21:29.520 --> 0:21:34.520 happens to her oftentimes, like number blocks will like calm 0:21:34.560 --> 0:21:36.560 her heart rate. Now, like she'll set in my lab. 0:21:36.880 --> 0:21:39.640 I'll hold her. I can feel her heart beating slower. 0:21:40.200 --> 0:21:40.439 You know. 0:21:40.520 --> 0:21:43.879 It's just it's something she's she knows and she's comfortable 0:21:43.920 --> 0:21:46.040 with and she's learning. 0:21:47.000 --> 0:21:50.080 Dylan was able to make his own version of number blocks, 0:21:50.359 --> 0:21:53.600 but he knows not every family has that option. For some, 0:21:53.720 --> 0:21:56.240 the choice comes down to a twenty five dollars toy 0:21:56.520 --> 0:21:59.879 or putting food on the table. And while he sidesteps 0:22:00.119 --> 0:22:03.639 expense by three D printing sum toys, Dylan says the 0:22:03.720 --> 0:22:07.919 decision to wage tariff wars weighs heavily on families like his. 0:22:08.600 --> 0:22:11.000 He can see the impact of tariffs just by looking 0:22:11.000 --> 0:22:13.679 at his plans for the holidays. Things are going to 0:22:13.680 --> 0:22:15.880 be a lot less Christmasy this year. 0:22:16.600 --> 0:22:20.320 For the girls because we spent the same amount of 0:22:20.320 --> 0:22:21.480 money as we always do. 0:22:21.520 --> 0:22:23.440 We just have less stuff. 0:22:23.640 --> 0:22:25.080 You know, it's still going to be Christmas more, He's 0:22:25.080 --> 0:22:28.399 still going to be presents to open, but it's noticeable 0:22:28.640 --> 0:22:30.240 what a dollar is going. 0:22:30.040 --> 0:22:30.560 To buy you. 0:22:31.119 --> 0:22:33.200 So it sounds like there's going to be less presence 0:22:33.280 --> 0:22:35.760 underneath the Christmas tree this year, even though you're spending 0:22:35.840 --> 0:22:36.360 just as much. 0:22:36.800 --> 0:22:39.439 Yeah, we didn't need to start a second ring around, 0:22:39.520 --> 0:22:42.720 Like you know, there's no stacking. It's just a it's 0:22:42.720 --> 0:22:47.240 a donut, so there's no there's no third dimension to it. 0:22:55.040 --> 0:22:58.480 This is the big take Asia from Bloomberg News. I'm Wanha. 0:22:58.880 --> 0:23:01.480 We followed learning recent sources from the factory floor in 0:23:01.560 --> 0:23:04.840 Vietnam and India to the Supreme Court. You can listen 0:23:04.840 --> 0:23:08.159 to the full series wherever you get your podcasts. The 0:23:08.240 --> 0:23:11.320 show is hosted by Me, David Gura, and Sarah Holder. 0:23:11.880 --> 0:23:15.840 The show is made by Aaron Edwards, David Fox, Jeff Grocott, 0:23:16.119 --> 0:23:21.919 Eleanor Harrison Dengate, Patty hirsh Rachel Lewis, Krisky, Katie mcmurranmi Um, 0:23:22.560 --> 0:23:28.000 Julia Press, Tracy Samuelson, Naomi Shaven, Alex Sugiia, Julia Weaver, 0:23:28.400 --> 0:23:32.080 Young Young and Taka Yasuzawa. To get more from the 0:23:32.080 --> 0:23:35.280 Big Take and unlimited access to all of Bloomberg dot com, 0:23:35.320 --> 0:23:39.720 subscribe today at Bloomberg dot Com Slash Podcast offer. Thanks 0:23:39.800 --> 0:23:42.560 for listening. We'll be back on Monday.