Full Breakdown
Kevin Hassett Critiques New York Fed Tariff Study as Flawed
2/19/2026, 1:44:29 AM
Overview of the Controversy
Kevin Hassett, the director of the National Economic Council and a senior economic adviser to President Donald Trump, has publicly criticized a recent study from the New York Federal Reserve. The paper, published on February 12, 2026, concluded that U.S. companies and consumers bear approximately 90% of the economic burden from tariffs imposed by the Trump administration. Hassett labeled the research as "the worst paper I've ever seen in the history of the Federal Reserve system," asserting that its authors should face disciplinary action for what he described as flawed analysis.
Key Findings of the New York Fed Study
The New York Fed study examined whether foreign exporters adjusted their prices in response to U.S. tariffs, concluding that most of the costs were passed on to American consumers and businesses. The researchers found that nearly 90% of the tariff burden fell on domestic buyers, contradicting the administration's narrative that foreign entities primarily absorb these costs. The study's findings align with similar conclusions from other reputable institutions, including the Congressional Budget Office and Harvard Business School.
Hassett's Critique
Hassett's main criticism focused on the study's methodology, which he argued was overly simplistic and ignored critical economic factors. He contended that the researchers failed to consider the broader implications of tariffs, such as their potential to boost domestic production and wages. "They’re focusing on prices and not factoring in changes in quantities of imports," Hassett stated, emphasizing that tariffs could lead to increased domestic manufacturing and higher wages for U.S. workers.
In his CNBC interview, Hassett asserted that the tariffs had contributed to a better standard of living, citing a rise in real wages by an average of $1,400 in the previous year and a decrease in inflation rates. He claimed that if the New York Fed's analysis were accurate, consumers could not have been better off under the tariff regime.
Official Responses and Criticism
The New York Fed declined to comment on Hassett's remarks. However, Claudia Sahm, a former Federal Reserve economist, described Hassett's call for disciplinary action as "deeply disturbing," suggesting it reflects an ongoing trend of the Trump administration attacking research that contradicts its economic messaging. Sahm and others have raised concerns about the implications of Hassett's comments for the independence of economic research.
Conflicting Reports and Gaps
While Hassett's critique has garnered attention, it is essential to note that many economists generally agree with the New York Fed's findings that tariffs act as a tax on consumers. The discrepancies between Hassett's assertions and the conclusions of the New York Fed highlight a significant divide in economic perspectives regarding the impact of tariffs on the U.S. economy.
Verbatim Quotes
- “The paper is an embarrassment. It's, I think, the worst paper I've ever seen in the history of the Fed system,” — Kevin Hassett, Director of the National Economic Council
- “What they’ve done is they 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.” — Kevin Hassett
- “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.” — Kevin Hassett
This ongoing debate underscores the complexities surrounding economic policy and the interpretation of data related to tariffs and their effects on the American economy.
