The New York Fed's research indicates that tariffs heavily burden American companies and consumers, while Hassett criticizes: it's embarrassing, and relevant personnel should be punished

Kevin Hassett, Director of the National Economic Council, stated on Wednesday that a study by the New York Federal Reserve shows that American businesses bear most of the tariff burden, calling the study "embarrassing" and suggesting that those involved should "be punished."

Hassett said, "The conclusions they reached generated a lot of news and are highly partisan; the level of analysis wouldn't even be accepted in the first semester of an introductory economics course." He also added that tariffs would benefit American consumers.

Hassett's remarks continue a series of criticisms from President Trump against economic analyses he dislikes.

In August, Trump posted on social media telling Goldman Sachs CEO David Solomon that he should "find himself a new economist." This came shortly after Goldman’s research team released a report stating that American consumers would ultimately bear most of the tariff costs.

Less than two weeks later, Trump fired then-Director of the Bureau of Labor Statistics, Erica McEntyre. At the time, the Bureau had released a report showing weak job growth, and she was dismissed just hours later.

A study released by the New York Federal Reserve last week found that by 2025, nearly 90% of the economic burden from tariffs would be borne by American businesses and consumers. The study stated:

In the first eight months of this year, about 94% of the tariff costs were passed on to American businesses and consumers. By November, the share borne by foreign exporters had slightly increased—10% of the tariffs corresponded to a 1.4% decrease in export prices, but the pass-through rate remained as high as 86%.

Our results show that the main part of the tariff burden still falls on American businesses and consumers.

The report also included a standard disclaimer stating, "The views expressed in this paper are solely those of the author and do not necessarily reflect the views of the Federal Reserve."

Hassett criticized the New York Federal Reserve's study for focusing only on prices and not considering changes in import quantities. He stated, "If we bring these goods back to domestic production and create demand domestically, then this will raise American wages, and American consumers will benefit as a result."

Hassett was once a leading candidate for the next Federal Reserve Chair, but Trump announced on January 30 that he had chosen former Federal Reserve Governor Kevin Walsh for the position. Walsh still needs to be confirmed by the U.S. Senate.

More Research Aligns with Federal Reserve Report Views

In fact, the conclusions of the New York Federal Reserve are similar to those of other studies. Gita Gopinath from Harvard University and Brent Neiman from the University of Chicago found that "tariffs are passed on to U.S. import prices almost 100%, thus the U.S. bears most of the costs."

The Congressional Budget Office also released an estimated report on the impact of tariffs. The agency believes that 5% of the tariff costs are borne by foreign exporters. Among the portion borne domestically, 30% is absorbed by businesses, and 70% is passed on to consumers.

Another study by the Kiel Institute in Germany referred to the tariffs of 2025 as a "own goal" for the U.S. The study concluded, "American importers and consumers bear almost all the costs. Foreign exporters only bear about 4% of the tariff burden, with the remaining 96% passed on to American buyers."