The Tariff Bill Isn't Finished Arriving
Small businesses spent last year absorbing what they couldn't pass on. New Fed research says about half of them still have price increases queued up, and most of those land within six months.
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Ask a shop owner about tariffs and you'll usually get one of two answers: I raised prices, or I ate it. The Federal Reserve Bank of New York went and asked 6,500 of them, and it turns out the real answer is mostly both.
That's the finding worth sitting with. In research published July 9, drawing on survey responses collected through the fall, the New York Fed reported that about 80% of small goods and retail firms passed at least some tariff cost on to customers. But roughly 60% also swallowed part of it. For goods firms, 36% did both. For retailers, 43%.
Doing both isn't a strategy. It's what happens when you can't raise prices enough to cover the increase and you stay open anyway. The difference came out of the margin.
They had no way out of it
The exposure was baked in long before the tariffs arrived. Roughly 70% of small goods firms and 80% of small retailers rely on imported inputs, and 80% of firms nationally said the price of those inputs was higher than the year before.
Retailers took the worst of it: 67% reported tariff-related financial trouble, against 55% of goods firms and 34% of service firms.
"Small businesses were particularly challenged by higher tariffs in 2025 to which they mostly responded by passing on higher tariff costs to their customers. Tariff-related challenges are associated with higher imported input costs and greater pessimism about generating employment and revenues in 2026." — Will Aarons and Asani Sarkar, Federal Reserve Bank of New York
That last clause is the one that will show up in next year's data. Firms that got hit by tariffs are measurably less likely to expect growth in revenue or hiring this year, and the researchers controlled for age, revenue, profitability and location before saying so.
Who actually pays a tariff
There is a persistent idea that a tariff is a bill sent to a foreign exporter. A separate New York Fed study went looking for that money and found it in American pockets.
Through the first eight months of 2025, U.S. importers bore 94% of the tariff cost. By November it had eased, slightly, to 86%. The researchers' own summary: "Nearly 90 percent of the tariffs' economic burden fell on U.S. firms and consumers." Over the same stretch, the average U.S. tariff rate climbed from 2.6% to 13%.
You can argue about whether tariffs are good policy. Who writes the check is not really in dispute.
The part that hasn't happened yet
In May, the New York Fed asked firms that had actually paid tariffs a simple question: are you done raising prices?
Only 30% of service firms and 20% of manufacturers said yes. Meanwhile 47% of service firms and 44% of manufacturers said more increases are coming, and most of those are landing inside six months.
Just 3% of service firms and 8% of manufacturers said the whole thing hadn't really affected them.
So the prices on your supplier invoices, and on the shelf at the store you shop at every week, are not at their ceiling. They are somewhere in the middle of a climb that has been going on quietly enough that most people have stopped connecting it to the word "tariff" at all.
Main Street's own numbers agree
The NFIB's May survey put small business optimism at 95.3, under its 52-year average of 98. Its uncertainty index hit 91 against a long-run average of 68. A net 36% of owners had raised prices, the most since March 2023. A net 34% planned to raise them again, the most since July 2022. Seventy percent reported supply chain disruption.
"The tariff climate is hurting our business. We are losing sales and our material costs are going up (even though we buy heavily domestic)." — A small manufacturer, in NFIB's May survey comments
One contrast is worth drawing carefully. A KPMG survey found that 34% of companies with more than $1 billion in revenue now push more than half their tariff costs onto customers, up from 13% a year ago. That is a survey of large corporations, and it would be wrong to describe it as a small-business figure. But set the two side by side and the shape of the problem is hard to miss. Big companies have pricing power. Small ones have margin, until they don't.
What This Means for You
If you own a small business: plan for supplier costs to keep rising, not to level off. About half the firms that paid tariffs told the Fed in May they still have increases coming, most within six months. And if you've been covering the gap out of your own margin — which the data says most owners did — that is the number to look at hard before you set next quarter's prices.
If you're retired and living on a fixed income: retail is the sector the Fed found hardest hit, and it's the one you're in every week. Because these increases are arriving gradually rather than all at once, they've become easy to mistake for ordinary inflation. They're not finished, and no cost-of-living adjustment is timed to catch them as they land.
Sources
- Federal Reserve Bank of New York, Liberty Street Economics, "Effect of Tariffs on U.S. Small Businesses," July 9, 2026 (Small Business Credit Survey; n=6,500, fielded Sept–Nov 2025)
- Federal Reserve Bank of New York, "More Tariff Pass-Through Is in the Pipeline," July 8, 2026 (Regional Business Surveys, fielded May 2026)
- Federal Reserve Bank of New York, "Who Is Paying for the 2025 U.S. Tariffs?", Feb. 12, 2026
- NFIB Small Business Economic Trends, May 2026 data, released June 9, 2026
- KPMG 2026 Tariff Survey, March 30, 2026 (300 C-suite leaders at firms with $1B+ revenue — large companies only)
Disclaimer: This article is news and general information only. It is not financial advice and not a recommendation about any purchase, investment, or business decision.