WASHINGTON — The Trump administration’s chief economist called for punishment of Federal Reserve researchers on Wednesday after they published findings indicating U.S. businesses and consumers shoulder nearly all costs from new trade tariffs implemented by the administration in recent months.
Kevin Hassett, who heads the White House National Economic Council, criticized the research during a CNBC appearance, stating: “The paper is an embarrassment. 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.”
The harsh criticism marks another instance of the Trump White House challenging the Federal Reserve’s traditional independence from political interference. The administration’s strong reaction also indicates ongoing sensitivity about economic pressures affecting American families, as polling data reveals continued public frustration with costs for essentials like food, housing, vehicles and home furnishings.
The New York Federal Reserve Bank’s research, released recently, determined that American businesses and consumers are absorbing approximately 90% of tariff expenses implemented under Trump’s trade policies. The study documented how average import duties jumped dramatically from 2.6% early last year to 13% by year’s end.
Multiple independent analyses have reached identical conclusions, including research conducted by Harvard University and University of Chicago economists, findings from Germany’s Kiel Institut research organization, and a recent nonpartisan Congressional Budget Office assessment.
The mechanics of tariff collection explain why domestic entities bear these costs. U.S. importing companies pay tariffs directly to federal treasury coffers, meaning foreign manufacturers would only absorb expenses if they substantially reduced their prices to compensate for the additional duties. However, the Fed’s analysis showed overseas exporters have implemented only minimal price reductions, far below tariff increases.
This confrontation follows a pattern of White House attacks on economists reaching similar conclusions about tariff burden distribution. Last August, Trump called for Goldman Sachs CEO David Solomon to terminate the firm’s chief economist after that analyst predicted Americans would increasingly shoulder tariff costs over time.
