Donald Trump’s economic advisor said that Federal Reserve writers behind a report claiming that Americans bear the brunt of tariffs should be “disciplined.”
Kevin Hassett, the director of the National Economic Council, criticized the Federal Reserve Bank of New York’s economic analysis of the impact of tariffs published last week, calling for the authors to be punished for their findings.
“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,” Hassett told CNBC.
The economists found that 90% of the economic burden of higher tariffs fell on US firms and consumers. The average tariff rate climbed to 13% from 2.6% in 2025 as part of Trump’s sweeping trade policy unveiled last April.
“While importers pay the duty, the ‘economic burden’ of the tariff can be shifted onto exporters if they lower their export prices,” the report reads. “There is 100 percent pass-through from tariffs to import prices, and therefore on U.S. consumers and firms,” the economists explained in the write.
Hassett defended the tariffs in his comments to CNBC.
“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.”
Hassett’s remarks come as Fed independence is in focus. The Trump administration is in the midst of criminal investigations into Fed Chair Jerome Powell and Fed governor Lisa Cook.
Claudia Sahm, a former Fed economist who is known for creating the Sahm rule, a popular recession indicator, said the comments, specifically Hassett calling for the paper’s authors to be disciplined, are “deeply disturbing.”
She added that Kevin Warsh, Trump’s nominee to replace Jerome Powell as Fed chair, “must” be asked about Hassett’s comments at his confirmation hearing.
“The Fed Chair has the ability to suppress research from the Fed. Will he if it disagrees with White House?” Sahm wrote.
Steve Sosnick, chief strategist at Interactive Brokers, told Business Insider that Hassett’s comments are “distressing.”
“At best it’s an angry outburst instead of a reasoned response, and at worst it is meant to chill speech and curb central bank independence,” he added.
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