Small businesses throughout Delaware and the nation grappled with significant financial strain from import taxes and rising inflation during 2025, according to a new Federal Reserve study released Tuesday.
The 2025 Small Business Credit Survey, conducted by all 12 regional Federal Reserve banks, identified increasing expenses for goods, services, and employee wages as the primary obstacle these companies encountered last year.
The survey found that over 40% of participating businesses reported that higher expenses linked to import taxes created financial difficulties, with retail and manufacturing sectors experiencing the most severe impact. Of those companies dealing with increased costs from the president’s trade policies, 76% transferred some expenses to customers while 60% absorbed portions of the additional costs internally.
According to the report, nearly half of surveyed companies obtain some materials from international sources, and the vast majority of these businesses saw foreign supply costs climb between 2024 and 2025.
Despite facing higher expenses, companies generally did not respond by switching suppliers or relocating operations to domestic sources, the study found.
Federal Reserve officials identified Trump’s import tax policies as a significant contributor to inflation during 2025, noting these measures caused their 2% inflation target to be exceeded. Most Fed policymakers anticipate the tariff effects will diminish throughout this year.
The Trump administration has consistently maintained that foreign countries bear the burden of these import taxes, arguing the policy aims to restore American manufacturing while generating government revenue. The administration has also employed these trade measures as diplomatic leverage.
However, recent analyses from the New York Federal Reserve and Congressional Budget Office concluded that, contrary to presidential claims, American consumers and businesses shoulder nearly all tariff costs. The future of the trade policy remains uncertain following a Supreme Court decision that found Trump’s extensive import taxes overstepped executive authority, though the president responded by implementing additional trade barriers.
The Federal Reserve study also examined small business adoption of artificial intelligence technology, discovering growing usage with minimal workforce disruption.
Nearly half of small companies currently utilize AI tools, while 15% intend to incorporate the technology within the coming year. The survey indicated that businesses primarily use artificial intelligence for content creation and marketing purposes, followed by enhancing individual worker efficiency.
While AI implementation did not alter labor expenses, it did boost productivity for numerous companies, according to the findings.
