Trump's economic adviser says authors of tariff study should be "disciplined"
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Hassett outside the White House in December. Photo: Anna Moneymaker/Getty Images
White House economic adviser Kevin Hassett said the authors of a New York Fed study that found that Americans pay for tariffs should be disciplined, in an interview with CNBC Wednesday morning.
Why it matters: The findings of the paper run counter to what President Trump has claimed about his tariffs, and the attention the research has received has created a political problem for the White House.
- Trump wrote in the WSJ that the burden of tariffs "has fallen overwhelmingly on foreign producers and middlemen, including large corporations that are not from the U.S."
Zoom in: That is not what the NY Fed study, out last week, concluded.
- Using government data, the authors found that U.S. importers of foreign goods paid 90% of the higher tariffs last year.
- They did this by looking at whether exporters lowered the prices of their goods, eating the costs of the tariffs, or if importers were paying more.
Zoom out: "I mean, the paper is an embarrassment," Hassett said on CNBC. "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."
- Hassett argued that prices have gone down, wages are up, and "consumers were made better off by the tariffs."
- The most recent CPI report found that inflation slowed in January, but prices did rise 2.4% from last year.
Reality check: "I think the findings of the paper are consistent with what standard economic analysis would suggest," Michael Strain, an economist at the conservative American Enterprise Institute, tells Axios.
- "The findings of the paper are also consistent with the empirical estimates of related papers," he says. The problem is its conclusions run counter to the White House narrative.
- "When things of the world happen that President Trump doesn't like, or when things in the world happen that run counter to his political interest, or to a narrative he's trying to push, he attacks them," Strain says.
Between the lines: It's not clear what Hassett meant by "disciplined."
- The New York Fed is not under the control of the White House, and its economists often pursue research that's independent of the Federal Reserve.
- Like the other regional Fed banks, the New York Fed has its own board of directors that appoints its president, subject to the Fed board of governors' approval.
- And there's a disclaimer on the paper that reads: "The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System."
