White House Criticizes Fed Study That Attributes the Burden of Tariffs to Businesses and Consumers
Director of the National Economic Council Kevin Hassett called for sanctions against economists for saying that businesses and consumers bear most of the cost of tariff policy.
Negocios Now Editorial Staff
White House economic advisor Kevin Hassett called for “discipline” for economists at the Federal Reserve Bank of New York who published a study indicating that the majority of the cost of tariffs imposed by the Trump administration is falling on American businesses and consumers.
In an interview on CNBC’s “Squawk Box,” Hassett called the report “an embarrassment” and asserted that it is “the worst study” he has seen in the history of the Federal Reserve System. He stated that the document presents conclusions that have generated widespread media coverage with an analysis that, in his opinion, would not pass muster at the level of an introductory economics course. Therefore, he believes the authors should face internal consequences.
The New York Fed study concluded that, through November 2025, 86% of the economic impact of the tariffs was absorbed by companies and consumers in the United States, while only 14% fell on foreign exporters. The report also noted that this proportion had been even higher at the beginning of the year: between January and August, the domestic share reached 94%, and in September and October it stood at 92%.
The researchers also observed that the average tariff rate increased significantly over the past year, rising from 2.6% at the beginning of 2025 to 13% at year-end. The highest point was recorded between April and May, when it hovered around 16%, following the presidential announcement of the so-called “Liberation Day” tariffs.
In its conclusions, the New York Fed maintained that the majority of the impact of the tariffs continues to affect U.S. firms and consumers, consistent with other recent studies showing that U.S. importers are absorbing almost the entire additional cost.
A similar analysis by the Congressional Budget Office (CBO) estimated that about 95% of the cost of tariffs ends up impacting domestic consumers, while foreign exporters absorb about 5%.
According to the CBO, companies pass on approximately 70% of these additional costs to consumers through higher prices, while the remaining 30% reduces their profit margins. Furthermore, considering that domestic producers can raise prices due to less foreign competition, the net effect would be an increase in consumer prices equivalent to the portion of the cost absorbed domestically.
The CBO also projected that the tariffs introduced in the last year will raise the personal consumption expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation, by about 0.8 percentage points cumulatively by the end of 2026. In November, the PCE stood at 2.8%, still above the central bank’s 2% target.
Despite these estimates, Hassett defended the White House’s trade policy. He stated that prices have generally fallen, that inflation has moderated over time, and that real wages increased by an average of $1,400 last year, which—according to his argument—demonstrates that consumers have benefited from the tariffs.
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