Kevin Hassett says Fed researchers should be ‘disciplined’ over report that Americans are paying tariffs
By Elisabeth Buchwald, CNN
(CNN) — National Economic Council Director Kevin Hassett said Wednesday that researchers at the New York Federal Reserve who produced a study finding American businesses and consumers are shouldering 90% of the cost of President Donald Trump’s tariffs should be “disciplined.”
“It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system,” Hassett told CNBC in an interview.
“The people associated with this paper should presumably be disciplined, because 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,” Hassett continued.
The New York Fed and the Fed Board of Governors declined to respond to CNN about Hassett’s comments.
Hassett’s primary concern with the research was, in his view, that it only focused on price-related effects of tariffs and not changes in the volume of imports.
However, that’s not entirely true. In assessing the tariff burdens, the authors calculate average duty rates over various periods of time. They define that as “the total monthly tariff revenue divided by the total value of imports in the month,” meaning import volume is taken into consideration. Specifically, they looked at how “global supply chains shifted in response to the higher tariffs.”
Like Fed officials who vote on interest-rate decisions, researchers at the 12 regional banks and Board of Governors go to great lengths to establish independence from outside political actors. The research they produce helps officials make more informed decisions by having a clearer sense of the state of the economy now and in the future. The researchers, however, do not make policy recommendations.
Hassett had been a top contender to replace Fed Chair Jerome Powell, whose term at the helm of the central bank expires in May. However, Trump announced last month that he had nominated former Fed Governor Kevin Warsh for the position, which requires Senate confirmation.
Like Trump, Warsh has been a staunch critic of the Fed and Powell, and has vowed to overhaul many facets of the central bank if confirmed.
His nomination comes at a time when the Trump administration has staged various attacks on the Fed and its longstanding independence. That includes a criminal inquiry into Powell and the Fed over a multibillion-dollar renovation of its headquarters and an attempt to fire Fed Governor Lisa Cook over unproven allegations of mortgage fraud.
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