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The young City players were beaten 5-3 in a dramatic penalty shoot-out after the sides had been deadlocked at 1-1 after both normal and extra time.
Substitute Cole Palmer’s effort which struck the bar proved the difference in the tense spot-kick drama with Liverpool successfully converting all five of their efforts to lift the trophy.
It was tough on City – especially given Taylor’s side had come within four minutes of glory only for Liverpool to cancel out Nabil Touaizi’s 45th minute opener with an equaliser from former City youngster Bobby Duncan on 86 minutes.
Despite the bitter disappointment, manager Taylor says looking at the bigger picture a squad which also lifted the Premier League Under 18 Cup earlier this season should still reflect with pride on their collective achievements this term.
“This is football. You get tough moments like that. It’s all part of the learning but it was a tough moment for the lads,” Taylor reflected.
“When you get to penalties one of the goalkeepers is normally the hero but as it turned out it was the crossbar that was the difference.
“You try to recreate it (a penalty shoot-out) in preparation but the occasion can sometimes do something a bit different to you – especially the young players.
“It’s tough for young lads as they can’t process it as properly as us older people.
“It’s also hard in that situation when you are so close and then the opposition score late on but I thought the lads showed real character during extra time."
“Everyone hurts right now but they are a good bunch of lads and they have done well this season,” Taylor added.
“They won one trophy and we wanted a double, but it didn’t happen. Now they need to use this as inspiration and energy to go on and do well in their careers.
“We want to be successful and trophies are nice but ultimately it’s about the lads gaining good experience to be able to develop into talented footballers fulfilling their potential.
“They won’t feel like it at the moment, but we’ve still got a lot to be proud of this season.”
Here's how our FA Youth Cup final with Liverpool unfolded...
Spanish central defender looks ahead to FA Youth Cup final clash with Liverpool
City’s Youth Cup journey began before Christmas and has taken in road trips to non-league Clevedon, Derby and Bournemouth as well as home encounters with Nottingham Forest and West Brom.