White House economic adviser Kevin Hassett said Wednesday that the authors of a recent New York Fed paper that found U.S. businesses and consumers shoulder the lion’s share of the tariff burden should be “reprimanded.”
In an interview with CNBC, the head of the National Economic Council trashed the report, saying the central bank’s researchers ignored important aspects of how the mandate would work and instead focused solely on prices. Hassett said the study should have also included the upward effects on wages and benefits that U.S. companies are seeing from increased domestic production.
“So this paper is embarrassing,” Hassett said in an interview on “Squawk Box.” “I think this is the worst paper I’ve ever seen in the history of the Federal Reserve System. The people involved in this paper should probably be punished, because what they did was come to a conclusion that generated a lot of highly partisan news based on analysis that wouldn’t be accepted in a first-semester economics class.”
The paper in question was posted on the New York Fed’s website on February 12th.
Essentially, the researchers looked at whether countries exporting goods to the United States were lowering prices, effectively paying the tariffs, or raising prices and passing them on to consumers and businesses. The paper found that about 90% of the additional costs of tariffs had been passed through, but noted that the impact had weakened somewhat as the year progressed.
However, Mr Hassett argued that the tariffs had little effect on prices and were contributing to improving living standards.
“Prices have come down. Inflation has come down over time. Import prices fell significantly in the first half of this year, but have since leveled off, and real wages rose by an average of $1,400 last year. This means consumers are benefiting from the tariffs,” he said. “So if this New York Fed analysis is correct, consumers would not have benefited from the tariffs. This is truly shameful. I can’t imagine who would have agreed to that.”
The consumer price index rose 2.4% in January from a year ago, and is up nearly 2% since April 2025, when President Donald Trump first announced tariffs. Core CPI, which excludes food and energy, rose 2.5% in January, the slowest annual increase since March 2021. Import prices were flat in December from a year earlier, while export prices rose 3.1%, according to the Bureau of Labor Statistics.
New York Fed officials declined to comment.
