Kevin Hassett, the director of the National Economic Council and a key economic advisor to former President Donald Trump, has publicly criticized economists at the Federal Reserve Bank of New York for their recent report assessing the impact of tariffs. Hassett called for disciplinary measures against the researchers responsible for the study, describing their work as deeply flawed and partisan.
The report in question concluded that American consumers and businesses bear approximately 90% of the economic burden resulting from increased tariffs. Specifically, it noted that the average tariff rate rose to 13% in 2025 from 2.6% the previous year, reflecting the administration’s extensive trade policies implemented the prior April. The economists explained that although importers formally pay the duties, the costs are effectively passed on to U.S. exporters and consumers through price adjustments.
Hassett strongly condemned the report during an interview with CNBC, stating, “The paper is an embarrassment. It’s, I think, 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 because what they’ve done is 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.”
In defending the tariffs, Hassett emphasized the administration’s rationale, suggesting that while imports from China may sometimes be less expensive, supporting domestic producers could ultimately strengthen the U.S. economy. He explained, “The basic theory of President Trump’s tariffs is that, sure we’re importing stuff from China, but we’ve got producers in the US that make the same stuff, maybe at a slightly higher price. If we bring the stuff home, create the demand at home, then that will hurt China and drive up wages in the US and American consumers be better off.”
The call for punitive action against Federal Reserve economists raises concerns about the independence of the central bank. This tension emerges amid ongoing criminal investigations involving Federal Reserve Chair Jerome Powell and Governor Lisa Cook. Claudia Sahm, a former Fed economist and creator of a noted recession indicator, described Hassett’s remarks as “deeply disturbing.” She also urged that Kevin Warsh, Trump’s nominee to replace Powell as Fed Chair, be questioned about these statements during his confirmation process, highlighting the potential for suppression of research that conflicts with White House views.
Steve Sosnick, chief strategist at Interactive Brokers, also described Hassett’s comments as “distressing” and suggested that such reactions might be intended to intimidate researchers and undermine the autonomy of the Federal Reserve.
This episode intensifies debates about the relationship between the Federal Reserve and the executive branch, especially regarding the transparency and independence of economic research and policy analysis within the central banking system.
