White House Urges Discipline for Fed Economists Over Tariff Impact Study

Washington – The White House is facing criticism for its response to a recent report from the Federal Reserve Bank of New York, which found that American companies and consumers have borne the brunt of the costs associated with the Trump administration’s tariffs. Kevin Hassett, director of the White House’s National Economic Council, publicly condemned the study and suggested those involved should be disciplined.

Hassett Calls Report “Embarrassing” and “Worst Ever”

In an interview on CNBC, Hassett labeled the New York Fed’s research “the worst paper I’ve ever seen in the history of the Federal Reserve system” and “an embarrassment.” He argued the study was fundamentally flawed in its analysis, suggesting it failed to adequately consider the impact of reduced imports and increased domestic production resulting from the tariffs. According to a report by the Associated Press, Hassett stated the researchers “should presumably be disciplined.”

The New York Fed’s Findings

The Federal Reserve Bank of New York’s report indicated that approximately 90% of the increased costs from tariffs were passed on to U.S. Importers and, consumers. This finding aligns with similar studies conducted by economists at Harvard and the University of Chicago, the Kiel Institut (a German suppose tank), and the nonpartisan Congressional Budget Office. These studies collectively suggest that the benefits of tariffs, if any, have been largely offset by increased costs for American businesses and households.

White House Defends Tariff Policy

Hassett countered the report’s findings, arguing that tariffs have actually led to lower prices and increased real wages. He claimed that real wages rose by an average of $1,400 last year, offsetting any potential increases in the cost of living. He asserted that the administration’s policies are “working, very clearly they are working,” pointing to strong economic growth and declining inflation.

Broader Context: Ongoing Tension with the Federal Reserve

Hassett’s strong criticism of the Federal Reserve economists represents the latest instance of tension between the Trump administration and the traditionally independent central bank. The administration has repeatedly questioned the Fed’s policies and research, particularly when those findings are perceived as critical of the administration’s economic agenda. This latest dispute highlights the White House’s sensitivity to concerns about rising costs for essential goods and services, a key issue for voters as the midterm elections approach.

As reported by USA Today, the White House is not pleased with the New York Fed’s research.

According to Politico, Hassett said Federal Reserve staff should be punished for their findings.