White House Adviser Demands Discipline for Fed Researchers After Study Shows Americans Shoulder Tariff Costs

2026-02-18 economy

Washington D.C., Wednesday, 18 February 2026.
Kevin Hassett demanded punishment for Federal Reserve researchers after their study concluded U.S. consumers, not foreign exporters, bore 90% of the economic burden from 2025 tariffs, calling the work an “embarrassment.”

Administrative Backlash on the Airwaves

On Wednesday, February 18, National Economic Council Director Kevin Hassett escalated the administration’s criticism of the central bank during an interview on CNBC’s “Squawk Box” [1][3]. Hassett characterized the New York Federal Reserve’s recent analysis as “highly partisan” and asserted that the methodology—which he claims focused exclusively on price impacts while ignoring wage benefits—would not be accepted in a “first-semester econ class” [1][2]. He went further to suggest that the authors associated with the report should be disciplined for producing what he termed the “worst paper” he had ever seen in the history of the Federal Reserve system [1][2]. This harsh rebuke underscores a widening rift between White House economic narratives and the data emerging from the Federal Reserve regarding the efficacy of trade policies implemented over the last year [1][3].

Dissecting the Disputed Data

The study at the center of this controversy, published on February 12 by the Federal Reserve Bank of New York, presents a starkly different view of the tariff landscape than the one promoted by the administration [1][8]. Authored by researchers including Mary Amiti and David E. Weinstein, the paper analyzed import data through November 2025 and concluded that U.S. firms and consumers—not foreign exporters—bore approximately 90% of the economic burden of the tariffs imposed in 2025 [8]. The researchers found that as the average statutory tariff rate on U.S. imports surged by 400%—rising from 2.6% at the start of 2025 to 13% by December—foreign exporters did not broadly lower their prices to offset the duties [6][8]. Instead, the study indicates a high “pass-through” rate, where the costs were transferred almost entirely to American importers [6][8].

Conflicting Economic Indicators

Hassett defended the administration’s policies by citing alternative economic metrics, arguing that prices have decreased and that real wages rose by $1,400 on average last year [1][5]. He contended that consumers are better off, a position he claims is incompatible with the New York Fed’s analysis [1]. However, broader inflation data paints a more complex picture. The Consumer Price Index (CPI) for January 2026 rose 2.4% from the previous year, with core CPI—excluding food and energy—posting a 2.5% gain [1]. Furthermore, contrary to Hassett’s assertion of dropping prices, import prices remained flat in December compared to the prior year, while export prices saw a 3.1% increase [1].

Sources

Federal Reserve Trade Policy