Full Breakdown
Tensions Rise Over Federal Reserve's Tariff Study
2/23/2026, 3:47:51 AM
Core Event: Criticism of the New York Fed's Tariff Research
The ongoing conflict between the Trump administration and the Federal Reserve has intensified following a study from the Federal Reserve Bank of New York, which found that American businesses and consumers bear 90% of the costs associated with President Donald Trump's tariffs. National Economic Council Director Kevin Hassett publicly criticized the study, labeling it "the worst paper I've ever seen in the history of the Federal Reserve system." His remarks raise concerns about potential political interference in the traditionally independent research of the Federal Reserve.
Background & Context: The Tariff Debate
The New York Fed's study, published on February 12, 2026, contradicts the White House's narrative that tariffs benefit American workers and the economy. Hassett's critique centers on the study's methodology, arguing that it failed to account for significant economic factors such as reduced import volumes, shifts in sourcing, and increased domestic production. This dispute underscores the broader debate regarding the real-world impacts of the Trump administration's trade policies.
Key Figures & Groups
- Kevin Hassett: Director of the National Economic Council and a senior economic adviser to President Trump, known for his strong defense of the administration's trade policies.
- Federal Reserve Bank of New York: A regional Federal Reserve bank that published the controversial study on tariffs, which has become a focal point of criticism from the White House.
Official Statements & Responses
Hassett expressed that the New York Fed study's narrow focus on price-related effects of tariffs overlooked broader economic implications. He stated, "What they've done is they've 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." This sentiment reflects the administration's ongoing efforts to counter research that contradicts its claims about the benefits of tariffs.
Criticism & Opposition
Critics of Hassett's stance argue that his comments may signal an attempt to undermine the independence of the Federal Reserve's research. The New York Fed researchers maintain that their analysis aimed to provide an independent assessment of the economic impacts of tariffs, which is essential for informed policymaking. The tension between the administration and the Fed raises questions about the integrity of economic research in the face of political pressures.
What's Next: Implications for Economic Policy
The dispute over the New York Fed's tariff research is likely to escalate, with potential implications for the central bank's independence and the administration's trade policies as the 2020 election approaches. The White House's continued pushback against research that contradicts its narrative suggests that the debate over the impacts of tariffs will remain a contentious issue in the coming months.
Verbatim Quotes
- “It's, I think, the worst paper I've ever seen in the history of the Federal Reserve system.” — Kevin Hassett, Director, National Economic Council
- “What they’re saying “The paper is an embarrassment.” — Kevin Hassett, Director, National Economic Council
