“Tariffs are not good for trade,” UPS CEO Carol Tomé told investors and analysts today on a grim earnings call. Shares in the shipping giant fell by double digits on weak guidance ahead of the holiday shopping season.  

Labor productivity measures how much stuff we make and do compared to how much time we spend making and doing it. Strong productivity growth helps businesses make more profits, which they can use to invest in equipment, hiring, raises, or price reductions — all of which can boost economic growth in the long run.

But right now, plenty of businesses across the country are dealing with a problem that’s whittling away at many of those economic benefits: the Trump administration’s tariffs.

Wolf Tooth Components is a manufacturer in Minnesota that makes bike parts, mostly out of aluminum. Co-owner Brendan Moore said over the last several years, the company’s been trying to boost output: It bought more aluminum milling machines, invested in more automation, and even moved workstations closer together.

“If there’s 30 or 40 steps from when a thing is a piece of aluminum to when we ship it, every one of those we’re scrutinizing to see where we can take a second out, or two seconds out, or combine steps,” Moore told Marketplace’s Justin Ho.

Moore said the goal is to make and sell more bike parts, rake in more profit, and use that money to develop new products, hire more workers, and expand.

But then came the Trump administration's tariffs. Moore said his aluminum costs spiked, along with the cost of the other imports he relies on.

“Certain components that aren’t made in the U.S. anymore. Say, for example, a small ball bearing,” Moore said.

As a result, Moore said that extra revenue he’s banked from all of those productivity improvements is being soaked up by the cost of tariffs.

“There’s less to re-invest, if you will, because (we’re) using some of that money to cover the extra costs we have right now,” Moore said.

Moore said he’s holding off on some new hires he wanted to make. The company also shelved plans to buy another building and expand operations.

“We’re investing in the things we need here and now, today, and maybe in the next coming months, but we’re not buying a piece of equipment that we think we’re going to need, or we’re pretty sure we’re going to need, in six months right now,” Moore said.

The massive tax and spending bill passed by Congress this month changed the decades-old regulations on cars and trucks. The Corporate Average Fuel Economy standards impose a fine on automakers whose fleets can’t drive a certain number of miles per gallon of gas, but under the “One Big Beautiful Bill Act,” that fine is now zero dollars.