Overview
Kevin Hassett, a senior economic adviser to President Donald Trump and director of the White House’s National Economic Council, on Wednesday delivered a forceful public rebuke of a New York Federal Reserve research paper addressing who ultimately pays for tariffs.
The paper reached the conclusion that Americans, rather than foreign entities, primarily bear the economic burden of U.S. tariffs. That finding stands in opposition to the Trump administration’s stance that foreign trading partners absorb most of the costs associated with import taxes. The New York Fed’s conclusions have also been echoed by similar findings from other sources, according to the reporting of the research and its reception.
Hassett’s critique
Speaking in a televised interview, Hassett described the study as "an embarrassment." He intensified his criticism by saying, "It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve System."
Hassett went further, urging that the researchers be subject to disciplinary action for producing what he characterized as an unacceptable piece of analysis. He said the authors had "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."
Policy context
The research note and Hassett’s response highlight a clear divergence between the New York Fed’s empirical assessment and the position advanced by the administration regarding the incidence of tariff costs. While the Fed-affiliated paper attributes most of the economic burden to U.S. consumers, the administration has argued that other countries largely shoulder those costs. The reporting indicates the New York Fed’s findings have been corroborated by similar studies, though the details of those studies are not laid out in the material under review here.
Implications for discourse
Hassett’s comments frame the debate in sharply partisan terms and call into question the credibility of the work in question, at least from his perspective. He recommended that the researchers face formal consequences, an appeal that centers on standards of academic and policy research within a central banking context.
What remains clear
The factual record for this report is limited to the New York Fed paper's main conclusion - that Americans primarily bear tariff costs - the Trump administration's opposing claim that foreign countries absorb those costs, and Hassett’s public condemnation and call for discipline. The reporting also notes that similar findings to the New York Fed’s have been published by other sources.