# Will Aarons and Asani Sarkar argue in Liberty Street Economics that tariffs burden small businesses [Canonical reading](https://escapemeridian.com/readings/will-aarons-and-asani-sarkar-argue-in-liberty-street-economics-8d0942e9) Published July 9, 2026, Will Aarons and Asani Sarkar argue in Liberty Street Economics that tariffs challenged small businesses by raising imported-input costs. Drawing on the 2025 Small Business Credit Survey, they compare firms nationally with those in the Federal Reserve Bank of New York’s Second District, which they define as New York, New Jersey, and Connecticut. Goods and retail firms more often reported tariff-related challenges than services firms. About 80 percent of goods and retail firms passed at least some higher costs on to customers, while about 60 percent also absorbed some costs. The authors associate tariff-related challenges with higher imported-input prices and greater pessimism about employment and revenues in 2026; these are reported expectations, not observed outcomes. They say small businesses are vulnerable to higher prices of imported inputs, and that firms with fewer resources may be less able to manage cost increases. Because broad inflation could be mistaken for tariff-related costs, the authors compare reported challenges across sectors, while noting that this concern affects interpretation. Headline and summary by Escape Meridian, prepared by Luna from the attributed source. A source check is not independent confirmation of the source’s claims. ## Original source Federal Reserve Bank of New York · Article Original source date: Jul 9, 2026 (2026-07-09T11:00:00.000Z). Date basis: Date supplied by the publisher’s feed. Added to Escape Meridian: 2026-11-06T08:53:23.296Z. First observed: 2026-10-29T15:09:57.999Z. Retrieved: 2026-10-29T15:11:45.858Z. - [Effect of Tariffs on U.S. Small Businesses](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Limits Text as retrieved on October 29, 2026; originally published July 9, 2026. The survey records firms’ reported challenges and expectations; the authors note that respondents may have potentially misattributed broad inflation effects to tariffs. The employment and revenue findings concern firms’ expectations for 2026, not observed outcomes. ## Open question How much of the reported cost pressure came from tariffs rather than broad inflation, given the survey’s reliance on firms’ reports of their challenges? ## Source-stated Aarons and Sarkar report that goods and retail firms more often reported tariff-related financial challenges than services firms. > Nationally, the share of firms reporting tariff-related challenges was 55 percent in the goods sector, 67 percent in the retail sector and 34 percent in the services sector - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors report that many goods and retail firms passed some higher imported-input costs to customers, while many also absorbed some costs. > About 80 percent of goods and retail firms, nationally and regionally, reported passing on at least some of the costs to customers. Consistent with partial pass-through of tariff costs, about 60 percent of these firms reported absorbing at least some of the cost increases internally. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated Aarons and Sarkar report an association between tariff-related challenges, higher imported-input prices, and more pessimistic employment and revenue expectations for 2026. > Tariff-related challenges are associated with higher imported input costs and greater pessimism about generating employment and revenues in 2026. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors caution that firms could have attributed broad inflation effects to tariffs, and use sector comparisons to assess that concern. > respondents may have potentially misattributed broad inflation effects to tariffs. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors’ comparison across sectors is offered as evidence that respondents identified tariff-related challenges. > firms in the goods and retail sectors were more likely to be challenged by tariff- than non-tariff-related costs, indicating that respondents correctly identified tariff-related challenges. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source and contributor context Federal Reserve Bank of New York · Publisher The publisher is identified here. No individual author has been inferred. ## Source media Media retrieval status: unchecked. ## Terms and references Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement. ## Editorial provenance Version 1. Publication ID: caaf72a9-3ca9-3afc-9617-bf115c599d2a. Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5. Source check: uncertain by anthropic/claude-opus-5.5 on 2026-11-06T08:50:11.248Z. This checks fidelity to the source, not whether its claims are independently true. Editorial selection: accept; reasons: bridge\_admitted\_by\_model. Observation: 6ef3efe8d222644824c1af1cd5648c3802b2aa582102b569bd98d47389ac5a93. Source text hash: df5669f3920f4aeb388e8f79e16320845ec2b20153c632d7291109275cb77bee. ## Revision and source-check history ### Version 1 — 2026-11-06T08:53:23.296Z Published July 9, 2026, Will Aarons and Asani Sarkar argue in Liberty Street Economics that tariffs challenged small businesses by raising imported-input costs. Drawing on the 2025 Small Business Credit Survey, they compare firms nationally with those in the Federal Reserve Bank of New York’s Second District, which they define as New York, New Jersey, and Connecticut. Goods and retail firms more often reported tariff-related challenges than services firms. About 80 percent of goods and retail firms passed at least some higher costs on to customers, while about 60 percent also absorbed some costs. The authors associate tariff-related challenges with higher imported-input prices and greater pessimism about employment and revenues in 2026; these are reported expectations, not observed outcomes. They say small businesses are vulnerable to higher prices of imported inputs, and that firms with fewer resources may be less able to manage cost increases. Because broad inflation could be mistaken for tariff-related costs, the authors compare reported challenges across sectors, while noting that this concern affects interpretation. ## Original source Federal Reserve Bank of New York · Article Original source date: Jul 9, 2026 (2026-07-09T11:00:00.000Z). Date basis: Date supplied by the publisher’s feed. Added to Escape Meridian: 2026-11-06T08:53:23.296Z. First observed: 2026-10-29T15:09:57.999Z. Retrieved: 2026-10-29T15:11:45.858Z. - [Effect of Tariffs on U.S. Small Businesses](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Limits Text as retrieved on October 29, 2026; originally published July 9, 2026. The survey records firms’ reported challenges and expectations; the authors note that respondents may have potentially misattributed broad inflation effects to tariffs. The employment and revenue findings concern firms’ expectations for 2026, not observed outcomes. ## Open question How much of the reported cost pressure came from tariffs rather than broad inflation, given the survey’s reliance on firms’ reports of their challenges? ## Source-stated Aarons and Sarkar report that goods and retail firms more often reported tariff-related financial challenges than services firms. > Nationally, the share of firms reporting tariff-related challenges was 55 percent in the goods sector, 67 percent in the retail sector and 34 percent in the services sector - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors report that many goods and retail firms passed some higher imported-input costs to customers, while many also absorbed some costs. > About 80 percent of goods and retail firms, nationally and regionally, reported passing on at least some of the costs to customers. Consistent with partial pass-through of tariff costs, about 60 percent of these firms reported absorbing at least some of the cost increases internally. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated Aarons and Sarkar report an association between tariff-related challenges, higher imported-input prices, and more pessimistic employment and revenue expectations for 2026. > Tariff-related challenges are associated with higher imported input costs and greater pessimism about generating employment and revenues in 2026. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors caution that firms could have attributed broad inflation effects to tariffs, and use sector comparisons to assess that concern. > respondents may have potentially misattributed broad inflation effects to tariffs. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source-stated The authors’ comparison across sectors is offered as evidence that respondents identified tariff-related challenges. > firms in the goods and retail sectors were more likely to be challenged by tariff- than non-tariff-related costs, indicating that respondents correctly identified tariff-related challenges. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/) ## Source and contributor context Federal Reserve Bank of New York · Publisher The publisher is identified here. No individual author has been inferred. ## Source media Media retrieval status: unchecked. ## Terms and references Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement. ## Editorial provenance Version 1. Publication ID: caaf72a9-3ca9-3afc-9617-bf115c599d2a. Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5. Source check: uncertain by anthropic/claude-opus-5.5 on 2026-11-06T08:50:11.248Z. This checks fidelity to the source, not whether its claims are independently true. Editorial selection: accept; reasons: bridge\_admitted\_by\_model. Observation: 6ef3efe8d222644824c1af1cd5648c3802b2aa582102b569bd98d47389ac5a93. Source text hash: df5669f3920f4aeb388e8f79e16320845ec2b20153c632d7291109275cb77bee. ### uncertain — 2026-11-06T08:50:11.248Z — anthropic/claude-opus-5.5 Publication: caaf72a9-3ca9-3afc-9617-bf115c599d2a attribution — pass: The reading correctly attributes the post to Will Aarons and Asani Sarkar in the New York Fed's Liberty Street Economics. It is a single analytical post, not a listing. The related-post links at the end are not used. > Will Aarons and Asani Sarkar, “Effect of Tariffs on U.S. Small Businesses,” Federal Reserve Bank of New York Liberty Street Economics summary — uncertain: The figures and terms are mostly accurate and accessible, and the Second District is explained. One closing clause is the problem: it says the authors compare sectors 'while noting that this concern affects interpretation.' The source says the opposite: the authors conclude the comparison indicates respondents correctly identified tariff-related challenges. As written, the clause attributes a residual caveat to the authors and erases their conclusion. Smallest repair: replace that clause with 'and conclude that the comparison indicates respondents correctly identified tariff-related challenges.' > indicating that respondents correctly identified tariff-related challenges date — pass: The evidence gives the instant 2026-07-09T11:00Z. The stated date, July 9, 2026, matches the UTC day and the source dateline. The 2026 employment and revenue findings are framed as firms' expectations, not outcomes. There is no hindsight framing. The kind is publisher-page, so no archive disclosure is needed. > July 9, 2026 support — pass: Each claim's excerpt is verbatim and supports it. The sector shares, the roughly 80 percent pass-on and 60 percent absorb figures, the association with input prices and 2026 pessimism, the misattribution concern and the sector-comparison rebuttal are all supported. The summary's point that firms with fewer resources may be less able to manage cost increases is supported by the source. The question follows from a concern the source itself raises and is not leading. > Smaller, less profitable firms with fewer resources are less able to do so. media — pass: No media is selected, and the evidence supplies no verified media candidates, so the null selection is appropriate. ## Recorded references Explicit citations in public readings and public file attachments to this reading. Shared topics are not citations. Other artifact types need an explicit reference adapter. No public references recorded here yet. [Reference data (JSON)](/readings/8d0942e91b7679c89831ed608333b1fd31a2f4fa6fa46138051d4b053a0c416f/references.json) ## Corrections and challenges [Send a correction or an opposing source](https://escapemeridian.com/corrections/) [JSON record](https://escapemeridian.com/readings/will-aarons-and-asani-sarkar-argue-in-liberty-street-economics-8d0942e9.json)