Not long after announcing the sweeping “Liberation Day” tariffs in April 2025, President Donald Trump claimed the taxes on imports would be good news for American small businesses.
“I’m proud to be the president for the workers, not the outsourcers—the president who stands up for Main Street, not Wall Street,” Trump said in a speech to the National Republican Congressional Committee.
A recent survey of small businesses by the Federal Reserve tells a very different story.
Small businesses were “particularly challenged by higher tariffs in 2025,” reports the Federal Reserve of New York, drawing on last year’s annual Small Business Credit Survey.
Most small businesses in the Federal Reserve survey said they responded to higher costs by increasing prices for consumers. Looking ahead, small business owners expressed “greater pessimism about generating employment and revenues in 2026” due to the tariffs.
Larger businesses are more likely to engage in international trade than smaller businesses, but that didn’t save small businesses from the tariffs. In fact, as Federal Reserve analysts Will Aarons and Asani Sarkar note, there are several reasons why smaller businesses felt more pain.
“Large firms may mitigate the incidence of higher input prices from tariffs by legal means and, more generally, have greater ability to maintain price markups,” wrote the researchers. “Smaller, less profitable firms with fewer resources are less able to do so.”
Tax and regulatory burdens often fall more heavily on smaller businesses—and conservatives usually understand that dynamic. Trump’s tariffs, meanwhile, have effectively hiked both regulations and taxes, and have created piles of paperwork alongside hefty bills for imported goods. After the Supreme Court struck down Trump’s “emergency” tariffs in February, the administration has created more headaches for businesses that just want to get a refund on the tariffs unlawfully collected from them.
And while few small businesses sell products overseas, 90 percent of manufacturers import some goods, according to the Federal Reserve report. Most imports to the U.S. are raw materials and intermediate goods used to make other things, and tariffs on those transactions usually end up being passed along the supply chain.
That phenomenon is likely to continue. A separate Federal Reserve analysis published last week warns that “nearly half of firms that have paid tariffs still plan additional price increases to offset these costs, with some expecting to raise prices six months or more in the future.”
The Federal Reserve reports add to a growing body of evidence showing how the tariffs have harmed small businesses. Earlier this year, Congress’s Joint Economic Committee published a report highlighting how small businesses had seen job losses and declining sales due to the tariffs’ impact.
“As a result of this upheaval which has created such uncertainty, our employees are suffering from stagnant wages and the possibility of loss of benefits,” Shirley Modlin, co-owner of a Virginia-based 3-D printing business, told the committee. “Our small manufacturers need predictability and stability.”
Tariffs aren’t saving American manufacturing or helping Main Street businesses. They are a burden, and the evidence shows that small employers are particularly vulnerable.
