Director of the National Economic Council Kevin Hassett. Photographer: Francis Chung/Politico/Bloomberg
National Economic Council Director Kevin Hassett said a study from the Federal Reserve Bank of New York showing that U.S. companies bear most of the tariff burden "is an embarrassment" and the people associated with it should be "disciplined."
"What they've done is they 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 said yesterday on CNBC. He added that U.S. consumers will be made better off by tariffs.
These remarks fit into a series of incidents in which President Donald Trump has attacked economic analyses he dislikes. In a social media post in August, Trump told Goldman Sachs Group Inc. CEO David Solomon he should "get himself a new economist." This outburst came shortly after Goldman researchers led by Jan Hatzius, the bank's chief economist, published a note saying U.S. consumers would eventually absorb a majority of tariff costs.
That came less than two weeks after Trump fired Erika McEntarfer, then the head of the Bureau of Labor Statistics (BLS), hours after a report from the agency showed weak job growth.
The New York Fed study, published last week, found that nearly 90 percent of the economic burden from tariffs in 2025 was borne by U.S. companies and consumers. Spokespeople for the New York Fed and the Fed's Board of Governors in Washington declined to comment.
According to the study, some 94 percent of the tariff costs were passed through to U.S. firms and consumers in the first eight months of the year. By November, foreign exporters were absorbing slightly more—a 10 percent tariff was associated with a 1.4 percent decline in export prices—but passthrough still stood at 86 percent.
"Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers," Mary Amiti, Chris Flanagan, Sebastian Heise, and David E. Weinstein wrote in the report. It included a standard disclaimer that "the views expressed in this post are those of the author(s)" and do not necessarily reflect the position of the Fed.
The New York Fed's findings were similar to the conclusions reached by other researchers. Harvard University's Gita Gopinath and Brent Neiman of the University of Chicago found "tariff passthrough to U.S. import prices is almost 100 percent, so the United States is bearing a large share of the costs."
The U.S. Congressional Budget Office (CBO) also published estimates of the impact of tariffs. It found that 5 percent of the cost of tariffs would be absorbed by foreign exporters. Of the amount borne in the United States, 30 percent would be absorbed by businesses and 70 percent passed on to consumers, the CBO said.
Another study, from researchers at Germany's Kiel Institute, called the 2025 tariffs an "own goal" for the U.S.: "American importers and consumers bear nearly the entire cost," the authors concluded. "Foreign exporters absorb only about 4 percent of the tariff burden—the remaining 96 percent is passed through to U.S. buyers."
Hassett criticized the New York Fed research for focusing on prices and not factoring in changes in quantities of imports. "If we bring the stuff home, create the demand at home, then that will hurt China and drive up wages of the U.S., and American consumers will be better off," Hassett said.
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