Trump Adviser Criticizes Federal Reserve Study on Tariffs
One of Donald Trump's top economic advisers has called for disciplinary action against a group of economists following a Federal Reserve study that concluded US firms and consumers have absorbed most of the costs from the president's tariffs.
Kevin Hassett, White House economic adviser and director of the National Economic Council, described the New York Federal Reserve report as "an embarrassment" and "the worst paper I've ever seen in the history of the Federal Reserve system."
The study revealed that in the previous year, 90% of the increased tariff costs were borne by US companies and shoppers.
Hassett's remarks to CNBC mark the latest criticism from the Trump administration directed at the Federal Reserve, which had previously focused on interest rate policies.
The New York Fed's paper was published amid the US Supreme Court's consideration of a legal challenge to Trump's extensive global tariffs.
"US firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025."
Hassett asserted that prices had decreased, inflation was lower, and "real wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs."
He further stated to CNBC:
"The people associated with this paper should presumably be disciplined, because 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."
The New York Fed declined to provide a comment on Hassett's criticism.
Supporting Research Aligns with Fed Findings
The findings of the New York Fed study are consistent with other recent analyses of tariffs. The Kiel Institute for the World Economy, an independent German research organization, reported last month that there was "near-complete pass-through of tariffs to US import prices."
Additionally, the National Bureau of Economic Research found that the pass-through of tariffs was "almost 100%," indicating that the US, rather than exporting countries, is effectively paying for the price increases.
Legal and Political Context of Tariffs
In recent months, President Trump has expressed frustration over the ongoing legal challenges to his trade policies. Small businesses and several US states contest the tariffs, arguing that the president has exceeded his legal authority.
The Supreme Court is expected to issue a ruling on the case as soon as this Friday.
Federal Reserve Under Pressure Amid Tariff Debate
The US central bank, responsible for setting interest rates, has faced pressure from President Trump to reduce borrowing costs more aggressively.
Federal prosecutors have recently initiated a criminal investigation concerning testimony given by Federal Reserve Chair Jerome Powell to the Senate about renovations to Fed buildings.
President Trump has also targeted Fed Governor Lisa Cook, expressing a desire to remove her from her position.
The Federal Reserve continues to monitor the impact of tariffs on inflation. At their January meeting, officials voted to maintain interest rates, citing signs of stabilization in the labor market.
Simultaneously, US inflation rates decreased last month, according to the Department of Labor, driven by falling prices in energy and used cars.
This decline could strengthen arguments by Trump and others that the Fed is in a position to lower interest rates without triggering renewed inflation.
However, some analysts caution that progress toward the Fed's 2% inflation target may slow if companies begin passing tariff costs more fully onto consumers.
Fed Officials Divided on Interest Rate Outlook
Minutes from the Fed's January meeting, released on Wednesday, highlighted divisions among officials regarding the future path of interest rates this year.
Some officials expressed concerns about the possibility of rate increases if inflationary pressures persist.
