Are Americans Really Footing the Bill for Tariffs? A Controversial Study Sparks Fiery Debate
A recent report from the New York Federal Reserve has ignited a heated discussion, with National Economic Council Director Kevin Hassett calling for the researchers behind it to be ‘disciplined.’ The study claims that American businesses and consumers bear a staggering 90% of the cost of President Donald Trump’s tariffs. But here’s where it gets controversial: Hassett isn’t just dismissing the findings—he’s labeling the paper as ‘the worst in the history of the Federal Reserve system.’
In a candid interview with CNBC, Hassett didn’t hold back. ‘The people associated with this paper should presumably be disciplined,’ he stated, arguing that the research is ‘highly partisan’ and based on analysis that wouldn’t pass muster in a beginner economics class. His core criticism? The study, he claims, narrowly focuses on the price effects of tariffs while ignoring changes in import volumes—a point that, upon closer inspection, may not be entirely accurate.
And this is the part most people miss: The authors of the study did account for import volumes. They calculated average duty rates by dividing total monthly tariff revenue by the total value of imports, explicitly considering how global supply chains adjusted to higher tariffs. This nuance raises questions about the validity of Hassett’s critique and whether his reaction is more about politics than economics.
The New York Fed and the Fed Board of Governors have remained silent on Hassett’s comments, but the broader implications of this dispute are hard to ignore. Federal Reserve researchers, like those who study interest-rate decisions, strive for independence from political influence. Their work is meant to inform policymakers, not dictate policy. Yet, this incident underscores the growing tension between the Trump administration and the Fed, an institution long prized for its autonomy.
But here’s where it gets even more intriguing: Hassett was once a top contender to replace Fed Chair Jerome Powell, whose term ends in May. However, Trump recently nominated former Fed Governor Kevin Warsh for the role—a move that adds another layer of complexity. Like Trump, Warsh has been a vocal critic of the Fed and has pledged to overhaul the central bank if confirmed. This nomination comes amid a series of attacks on the Fed’s independence, including a criminal inquiry into Powell and an attempt to remove Fed Governor Lisa Cook over unproven allegations.
Is Hassett’s criticism a fair assessment of flawed research, or is it a politically motivated attack on the Fed’s independence? The debate is far from over, and it raises critical questions about the role of economic research in shaping public policy. What do you think? Is the Fed’s research being unfairly targeted, or does Hassett have a point? Let’s discuss in the comments—this is one conversation you won’t want to miss.
