WH adviser Hassett urges 'discipline' for Fed economists over tariff study

WASHINGTON — President Donald Trump's top economist on Wednesday urged that Federal Reserve economists be punished for research last week that showed American companies and consumers paying for nearly all the new tariffs imposed by the White House last year.

“The paper is an embarrassment," Kevin Hassett, director of the White House's National Economic Council said in an interview on CNBC. "It’s the worst paper I’ve ever seen in the history of the Federal Reserve system. The people associated with this paper should presumably be disciplined.”

Hassett's comments represent the latest attack from the Trump administration on the Fed, which has traditionally been independent of day-to-day politics. It also suggests the White House remains sensitive to concerns about rising costs for groceries, housing, and big-ticket items such as furniture and cars, as surveys show Americans remain disgruntled about the economy.

Several other studies have reached similar conclusions as the New York Fed, including one by economists at Harvard and the University of Chicago; a separate report by the Kiel Institut, a German think tank; and a report last week by the nonpartisan Congressional Budget Office.

The Federal Reserve Bank of New York's study, published last week, found U.S. businesses and consumers are paying nearly 90% of the tariffs that Trump has imposed. Average tariffs on imports have risen from 2.6% at the beginning of last year to 13% at the end of the year, the economists found.

Since U.S. importers pay the tariffs to the U.S. Treasury, the main way overseas companies would bear the burden of the costs — as the Trump administration has said they do — would be if they ate the cost of the tariffs by lowering the price they charged to importers.

The New York Fed research found that foreign exporters have only slightly lowered their prices, by much less than tariffs have increased, leaving U.S. importers bearing the cost of the tariffs.

This isn’t the first time the White House has attacked economists for concluding that Americans are paying the tariffs or will soon do so. Last August, the chief economist at Goldman Sachs projected that Americans would pay an increasing share of the tariffs over time. Trump responded by calling on David Solomon, the CEO of Goldman Sachs, to fire the economist.

It's true that overall inflation hasn't risen as much as many economists expected from the tariffs, though that is in part because Trump has delayed, reduced, rolled back, or allowed exemptions to many of the duties. But the cost of many goods, including furniture, appliances, and tools has risen in the past year after the duties were imposed.

Both General Motors and Ford, for example, have said they have paid billions of dollars in tariff costs. Last fall GM said it expected to pay $3.5 billion to $4.5 billion in tariffs in 2025, while Ford said it paid $800 million in just the second quarter.

Overall, the government has received nearly $100 billion in tariff revenue since October, more than it received in all of the 2024 budget year.