New York Fed study finds that tariffs put heavy pressure on US companies and consumers, Hassett criticizes: embarrassing, relevant personnel should be punished

Kevin Hassett, director of the National Economic Council of the United States, said on Wednesday that a study by the New York Federal Reserve showed that American businesses bear the majority of the burden of tariffs, a study that is "embarrassing" and the individuals involved should be "penalized". Hassett said, "The conclusion they reached has generated a lot of news, and is highly partisan in nature, with analysis that would not even be accepted in the first semester of an introductory economics course." He also added that tariffs will benefit American consumers. Hassett's remarks continue a series of criticisms by President Trump against economic analyses that he does not like. In August, Trump took to social media to tell Goldman Sachs CEO David Solomon that he should "find a new economist for yourself." Shortly before that, Goldman's research team published a report stating that American consumers will ultimately bear the majority of the cost of tariffs. Less than two weeks later, Trump fired Erica McEntee, the head of the U.S. Labor Statistics Bureau. At the time, the Bureau released a report showing weak job growth, and she was dismissed a few hours later. A study released last week by the New York Federal Reserve found that nearly 90% of the economic burden of tariffs by 2025 is borne by American businesses and consumers. The study stated: About 94% of the cost of tariffs was passed on to American businesses and consumers in the first eight months of this year. By November, the proportion borne by foreign exporters had slightly increased - with 10% of tariffs corresponding to a 1.4% decrease in export prices, but the cost transfer rate still remained at 86%. Our results show that the main part of the burden of tariffs still falls on American businesses and consumers. The report also included a standard disclaimer stating, "The views expressed in this paper are those of the author and do not necessarily reflect the position of the Federal Reserve." Hassett criticized the New York Federal Reserve's study for only focusing on prices and not considering factors such as changes in import quantities. He said, "If we bring these goods back for domestic production, create demand domestically, then this will raise U.S. wages and American consumers will benefit." Hassett was once a leading candidate to be the next Chairman of the Federal Reserve, but Trump announced on January 30 that former Federal Reserve Board Member Kevin Walsh will be appointed to the position. Walsh still needs to be confirmed by the U.S. Senate. More research and Federal Reserve reports have similar views In fact, the conclusions of the New York Federal Reserve are similar to other research findings. Gita Gopinath of Harvard University and Brent Neiman of the University of Chicago found that "almost 100% of tariffs are passed on to U.S. import prices, thus the U.S. bears most of the cost." The Congressional Budget Office also issued an estimate report on the impact of tariffs, stating that 5% of the tariff costs are borne by foreign exporters. Among the portion borne domestically, 30% is absorbed by companies and 70% is passed on to consumers. Another study by the Kiel Institute in Germany describes tariffs in 2025 as a "mistake" for the United States. The study found that "American importers and consumers bear almost all the costs. Foreign exporters bear only about 4% of the tariff burden, with the remaining 96% passed on to American buyers." This article was originally published on Wall Street View, GMTEight editor: Chen Wenfang.