Trump's advisor wants New York Fed to be punished for 'embarrassing' report on tariffs

The Trump administration's move to exert control over the U.S. Federal Reserve is already raising eyebrows, and now other bodies are facing similar issues. A recent report by the Federal Reserve Bank of New York showed that American consumers and businesses are shouldering 90% of the costs of President Donald Trump's tariffs. The Trump administration has targeted this analysis with a scathing response. White House economic advisor Kevin Hassett recently stated that the Fed researchers must be punished for publishing the report.

“The paper is an embarrassment,” the National Economic Council Director said while appearing on CNBC’s “Squawk Box.” “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,” he emphasized, accusing the researchers of reaching “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.” The Hill reported that three Fed researchers and an economics professor at Columbia University authored the report.

Hassett further condemned the findings, stating that central bank analysts only focused on pricing and ignored crucial aspects of their duties. He underlined that the study instead should have highlighted how raising onshore production positively impacted the 'Make in America' agenda in terms of wages and manufacturing. However, researchers primarily examined how countries exporting to the U.S. adjusted their prices in response to tariffs. They found that the tariff-related costs were passed onto consumers and companies, although this effect diminished slightly over time.

Hassett further argued that, “Prices have gone down. Inflation is down over time. Import prices dropped a lot in the first half of the year, and then leveled off, and real wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs. So consumers couldn’t have been made better off by the tariffs if this New York Fed analysis was correct. It’s really just an embarrassment. I can’t imagine who signed off on it.”

As per CNBC, since Trump initially announced tariffs in April 2025, the consumer price index has risen by about 2%, with a 2.4% increase in January over the prior year. January's 2.5% increase in the core CPI, which does not include food and energy, was the lowest yearly advance since March 2021. According to the Bureau of Labor Statistics, export prices increased by 3.1% year over year, while import prices stayed the same.

Meanwhile, given his prior position at the New York Fed (1992-1997), Hassett's "call for discipline" has generated debate. Former Fed research director Claudia Sahm called his remarks "deeply disturbing" and recommended that senators question Kevin Warsh, the nominee for chair of the Federal Reserve, about potential research suppression. Hassett's history of errors, such as his failed forecast in "Dow 36,000" and a false pandemic death estimate during his time in the Trump administration, was also pointed out by critics.

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