WH adviser Hassett urges ‘discipline’ for Fed economists over tariff study

WASHINGTON (AP) — President Donald Trump’s top economist on Wednesday urged that Federal Reserve economists be punished for research last week that showed American companies and consumers paying for nearly all the new tariffs imposed by the White House last year.

“The paper is an embarrassment,” Kevin Hassett, director of the White House’s National Economic Council said in an interview on CNBC. “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.”

Hassett’s comments represent the latest attack from the Trump administration on the Fed, which has traditionally been independent of day-to-day politics. It also suggests the White House remains sensitive to concerns about rising costs for groceries, housing, and big-ticket items such as furniture and cars, as surveys show Americans remain disgruntled about the economy.

Several other studies have reached similar conclusions as the New York Fed, including one by economists at Harvard and the University of Chicago; a separate report by the Kiel Institut, a German think tank; and a report last week by the nonpartisan Congressional Budget Office.

The Federal Reserve Bank of New York’s study, published last week, found U.S. businesses and consumers are paying nearly 90% of the tariffs that Trump has imposed. Average tariffs on imports have risen from 2.6% at the beginning of last year to 13% at the end of the year, the economists found.

Since U.S. importers pay the tariffs directly to the Treasury, the main way overseas companies would bear the burden of the costs — as the Trump administration has said they do — would be if they reduced their prices to offset the tariff costs. The New York Fed research found that foreign exporters have only slightly lowered their prices, by much less than the tariff increase.

This isn’t the first time the White House has attacked economists for concluding that Americans are paying the tariffs or will soon do so. Last August, the chief economist at Goldman Sachs projected that Americans would pay an increasing share of the tariffs over time. Trump responded by calling on David Solomon, the CEO of Goldman Sachs, to fire the economist.