White House economic adviser Kevin Hassett on Wednesday said staffers at the New York Federal Reserve should be punished for producing research that found most of President Donald Trump’s tariffs are being paid by U.S. firms and consumers.
Hassett on CNBC called the paper, co-authored by four people including the New York Fed’s head of labor and product markets, “an embarrassment” and “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,” he added.
Hassett, the director of the National Economic Council, was previously on Trump’s short list to be the next chair of the Fed, but the president ultimately selected former Fed board member Kevin Warsh.
“Prices have gone down. Inflation is down over time,” Hassett said. “Import prices dropped a lot in the first half of the year and then leveled off, and [inflation-adjusted] wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs. And consumers couldn’t have been made better off by the tariffs if this New York Fed analysis was correct.”
In a post on the NY Fed’s Liberty Street Economics blog, the researchers said 90 percent of the economic burden of Trump’s tariff regime has fallen on domestic buyers.
Other reputable sources have produced similar findings, including Harvard Business School; Yale’s Budget Lab; the Kiel Institute for the World Economy, a German think tank; and the Congressional Budget Office.
The vast majority of the cost of the tariffs was paid by the U.S. in the first eight months of 2025, according to the Fed paper, though that share had dropped slightly by the end of the year.
“Our results imply that U.S. import prices for goods subject to the average tariff increased by 11 percent … more than those for goods not subject to tariffs,” the researchers wrote. “U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.”
The New York Fed declined to comment.
