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White House Advisor Slams NY Fed Tariff Study as 'Worst Paper Ever'

White House economic advisor Kevin Hassett has strongly criticized a recent study from the New York Federal Reserve regarding tariff burdens. During a CNBC interview, he described the research as an embarrassment and suggested disciplinary action against its authors. Hassett argued that the study ignored significant wage impacts and produced partisan conclusions contrary to Bureau of Labor Statistics data. He claimed tariffs actually lowered prices and boosted real wages by $1,400 last year, contradicting the NY Fed's findings. While the study indicated consumers absorbed 90% of tariff costs, Hassett maintained that consumers were made better off by the policies. An official from the New York Fed declined to comment on the controversy.

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White House economic advisor Kevin Hassett has publicly condemned a New York Federal Reserve study on tariff burdens, labeling it an embarrassment and calling for disciplinary action against its authors.

The Controversy Over Tariff Research

During an interview on CNBC's "Squawk Box" on Wednesday, the National Economic Council director expressed strong dissatisfaction with a report published by the New York Fed. Hassett described the research as the worst paper he had ever seen in the history of the Federal Reserve system.

He argued that the study failed to account for several critical economic factors:

  • Ignored Wage Impacts: The researchers allegedly focused solely on prices while neglecting upward impacts on wages and benefits from bringing production onshore.
  • Partisan Conclusions: Hassett claimed the analysis produced conclusions that would not be accepted in a basic economics class.
  • Methodological Flaws: He stated the paper created news based on partisan analysis rather than objective economic data.

Diverging Economic Data

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The core of the dispute lies in conflicting interpretations of how tariffs affect consumers and prices. The New York Fed study, released on February 12, found that approximately 90% of added tariff costs were passed on to consumers.

In contrast, Hassett insisted that tariffs had a positive impact on the standard of living:

  • Price Reductions: He noted that import prices dropped significantly in the first half of the year before leveling off.
  • Wage Growth: According to Hassett, real wages increased by an average of $1,400 last year.
  • BLS Data: The Bureau of Labor Statistics reported that import prices were flat while export prices rose 3.1% in December.

Response and Context

The Consumer Price Index (CPI) data presented a mixed picture during the period in question. In January, the CPI rose 2.4% from a year ago, though it was up nearly 2% from April 2025 when President Donald Trump first announced the tariffs.

When asked about the criticism, an official from the New York Fed declined to comment on the matter.

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