Kevin Hassett Urges NY Fed to Hold Economists Accountable for Tariff Research
U.S. Trade Representative Jamieson Greer discusses President Donald Trump’s decision to raise tariffs on South Korea and a trade agreement between India and the EU on ‘Kudlow.’
On Wednesday, White House economic advisor Kevin Hassett expressed strong criticism of a research paper published by the New York Federal Reserve. The paper concluded that the majority of the burden from the Trump administration’s tariffs is falling on U.S. businesses and consumers. Hassett labeled the findings as an “embarrassment” and described it as “the worst paper I’ve ever seen in the history of the Federal Reserve system” during an interview on CNBC’s “Squawk Box.”
Hassett further asserted that the authors of the paper should face disciplinary action, claiming that their conclusions have generated highly partisan news based on flawed analysis. “What they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class,” he stated.
The New York Fed’s research indicated that as of November 2025, U.S. businesses and consumers were shouldering 86% of the tariff burden, while foreign exports accounted for only 14%. Interestingly, the share borne by U.S. entities had decreased from 94% earlier in the year to 92% in the months of September and October.
FED DISSENT GROWS AS SOME OFFICIALS WEIGH RETURN TO INTEREST RATE HIKES AMID STUBBORN INFLATION
Kevin Hassett, director of the National Economic Council, called for New York Fed researchers to face punishment over their research finding that the U.S. is bearing most of the cost of tariffs. (Aaron Schwartz/CNP/Bloomberg/Getty Images)
The research also revealed a significant increase in the average tariff rate, which surged from 2.6% at the beginning of 2025 to 13% by year-end. The peak was observed in April and May, coinciding with the announcement of the “Liberation Day” tariffs.
The New York Fed’s findings align with other studies indicating that U.S. firms and consumers are absorbing nearly all the costs associated with tariffs. “Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers,” the report stated.
TARIFFS MAY HAVE COST US ECONOMY THOUSANDS OF JOBS MONTHLY, FED ANALYSIS REVEALS
President Donald Trump announced a dramatic hike in tariffs during his “Liberation Day” event in April 2025, though some of the tariffs were implemented at lower levels than those he revealed. (Chip Somodevilla/Getty Images)
These findings mirror those from a recent analysis by the nonpartisan Congressional Budget Office (CBO). The CBO reported that foreign exporters are absorbing about 5% of the tariff costs, with the remaining 95% falling on U.S. firms and consumers. The CBO also projected that U.S. businesses would pass on approximately 70% of their tariff costs to consumers, while the remaining 30% would impact their profit margins.
Furthermore, the CBO’s analysis indicated that the new tariffs imposed over the past year would increase the personal consumption expenditures (PCE) index by about 0.8 percentage points by the end of 2026. The PCE index is the Fed’s preferred inflation gauge and was recorded at 2.8% in November, significantly above the Fed’s 2% target.
TRUMP CREDITS TARIFFS FOR HUNDREDS OF BILLIONS GAINED WITH ‘VIRTUALLY NO INFLATION,’ TOUTS SECURITY
In his CNBC interview, Hassett defended the Trump administration’s tariffs, asserting that American consumers are ultimately better off due to them. He claimed that prices have decreased, inflation has stabilized, and real wages increased by an average of $1,400 last year. “So consumers couldn’t have been made better off by the tariffs, if this New York Fed analysis was correct. It’s really just an embarrassment,” Hassett concluded.
U.S. Trade Representative Jamieson Greer discusses President Donald Trump’s decision to raise tariffs on South Korea and a trade agreement between India and the EU on ‘Kudlow.’
On Wednesday, White House economic advisor Kevin Hassett expressed strong criticism of a research paper published by the New York Federal Reserve. The paper concluded that the majority of the burden from the Trump administration’s tariffs is falling on U.S. businesses and consumers. Hassett labeled the findings as an “embarrassment” and described it as “the worst paper I’ve ever seen in the history of the Federal Reserve system” during an interview on CNBC’s “Squawk Box.”
Hassett further asserted that the authors of the paper should face disciplinary action, claiming that their conclusions have generated highly partisan news based on flawed analysis. “What they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class,” he stated.
The New York Fed’s research indicated that as of November 2025, U.S. businesses and consumers were shouldering 86% of the tariff burden, while foreign exports accounted for only 14%. Interestingly, the share borne by U.S. entities had decreased from 94% earlier in the year to 92% in the months of September and October.
FED DISSENT GROWS AS SOME OFFICIALS WEIGH RETURN TO INTEREST RATE HIKES AMID STUBBORN INFLATION
Kevin Hassett, director of the National Economic Council, called for New York Fed researchers to face punishment over their research finding that the U.S. is bearing most of the cost of tariffs. (Aaron Schwartz/CNP/Bloomberg/Getty Images)
The research also revealed a significant increase in the average tariff rate, which surged from 2.6% at the beginning of 2025 to 13% by year-end. The peak was observed in April and May, coinciding with the announcement of the “Liberation Day” tariffs.
The New York Fed’s findings align with other studies indicating that U.S. firms and consumers are absorbing nearly all the costs associated with tariffs. “Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers,” the report stated.
TARIFFS MAY HAVE COST US ECONOMY THOUSANDS OF JOBS MONTHLY, FED ANALYSIS REVEALS
President Donald Trump announced a dramatic hike in tariffs during his “Liberation Day” event in April 2025, though some of the tariffs were implemented at lower levels than those he revealed. (Chip Somodevilla/Getty Images)
These findings mirror those from a recent analysis by the nonpartisan Congressional Budget Office (CBO). The CBO reported that foreign exporters are absorbing about 5% of the tariff costs, with the remaining 95% falling on U.S. firms and consumers. The CBO also projected that U.S. businesses would pass on approximately 70% of their tariff costs to consumers, while the remaining 30% would impact their profit margins.
Furthermore, the CBO’s analysis indicated that the new tariffs imposed over the past year would increase the personal consumption expenditures (PCE) index by about 0.8 percentage points by the end of 2026. The PCE index is the Fed’s preferred inflation gauge and was recorded at 2.8% in November, significantly above the Fed’s 2% target.
TRUMP CREDITS TARIFFS FOR HUNDREDS OF BILLIONS GAINED WITH ‘VIRTUALLY NO INFLATION,’ TOUTS SECURITY
In his CNBC interview, Hassett defended the Trump administration’s tariffs, asserting that American consumers are ultimately better off due to them. He claimed that prices have decreased, inflation has stabilized, and real wages increased by an average of $1,400 last year. “So consumers couldn’t have been made better off by the tariffs, if this New York Fed analysis was correct. It’s really just an embarrassment,” Hassett concluded.
