Hassett Critiques New York Fed's Tariff Study, Calls for Accountability
By John Nada·Feb 18, 2026·5 min read
Kevin Hassett criticized a New York Fed study on tariffs, calling it flawed and misleading. He argues this misrepresentation could affect economic policy discussions.
White House economic advisor Kevin Hassett lambasted a recent New York Federal Reserve study, stating it misrepresented the impact of tariffs on U.S. consumers and companies. In a CNBC interview, Hassett described the paper as 'an embarrassment' and asserted that its conclusions were based on flawed analysis. He emphasized that the research failed to account for important factors, such as the upward pressure on wages and benefits resulting from increased domestic production.
Hassett's critique did not just stop at the content of the research but extended to a call for accountability among the authors. He asserted that those responsible for the report should be 'disciplined' for their oversight. This statement highlights a growing concern within economic circles about the integrity and reliability of economic research, especially when it can influence public policy and opinion. In a climate where economic data is scrutinized more than ever, the credibility of research institutions like the Federal Reserve is paramount.
The paper, published on February 12, examined whether foreign exporters were absorbing tariff costs or passing them onto U.S. consumers. According to the study, roughly 90% of the additional costs from tariffs were passed on, although it acknowledged that this effect diminished over time. The researchers aimed to determine if the tariffs resulted in lower prices for consumers or if U.S. companies were bearing the brunt of these additional costs. This analysis is crucial as it can influence how tariffs are perceived in economic discussions and shape policy going forward.
Hassett countered these findings, arguing that tariffs had a minimal effect on prices and instead contributed positively to the standard of living by increasing real wages. He pointed out that the tariffs are not just a burden but can also incentivize domestic production, which in turn can lead to increases in wages and benefits for American workers. This perspective emphasizes the interconnectedness of tariffs, domestic production, and wage growth, an aspect that Hassett believes was overlooked by the New York Fed's researchers.
During the interview, Hassett made a strong claim regarding the impact of tariffs on the consumer price index (CPI). The CPI showed a year-over-year rise of 2.4% in January, with the core CPI's growth noted at its lowest since March 2021. However, Hassett maintained that the data does not support the Fed's conclusions, arguing that the increase in prices does not directly correlate with the imposition of tariffs. Instead, he pointed to the broader trend of falling inflation and import prices, which he claimed were at odds with the findings of the New York Fed study.
Hassett’s argument is based on the assertion that prices have actually decreased over time, contradicting the notion that tariffs lead to higher costs for consumers. He cited a significant statistic: real wages increased by $1,400 on average last year, which he argues suggests that consumers were made better off by the tariffs. This statistic serves as a cornerstone of his argument, demonstrating that despite the imposition of tariffs, there has been a tangible benefit to wage earners in the U.S. economy.
Moreover, Hassett highlighted that import prices saw a significant drop during the initial half of the year. This detail is crucial because it suggests that the dynamics of tariffs and trade are more complex than simply raising consumer prices. The findings from the Bureau of Labor Statistics indicated that import prices were flat in December compared to a year ago, while export prices rose by 3.1%. These figures could indicate a stabilizing trade environment, where tariffs do not necessarily equate to higher expenses for consumers.
The ongoing debate about the economic implications of tariffs is part of a larger narrative that includes various stakeholders, from policymakers and economists to business leaders and consumers. As such, the integrity of research produced by institutions like the New York Fed becomes critical. Hassett's comments underscore a pressing concern: when economic analyses are perceived as partisan or flawed, they can lead to mistrust in institutional findings and, consequently, in public policy.
The implications of this debate extend to how tariffs are perceived in economic policy discussions, particularly regarding their effect on domestic economic health and consumer welfare. As tensions over tariff impacts continue, the integrity of economic research will be scrutinized, with potential ramifications for policy-making and public trust in institutional analyses. This scrutiny is not just limited to the Federal Reserve; it encompasses the broader economic community’s ability to provide reliable and unbiased information to inform policy decisions.
In the backdrop of these discussions, the administration's approach to tariffs remains a critical topic. The balancing act between protecting domestic industries and ensuring consumer welfare is fraught with challenges. As Hassett suggests, if the findings of the New York Fed paper are accepted without question, it could lead to policy decisions that may not be in the best interest of American consumers and workers.
Hassett's stance also opens up a broader inquiry into how economic policies are evaluated. If the research methodologies employed by institutions like the Federal Reserve can be easily criticized or deemed inadequate, then policymakers may need to reassess how they incorporate such analyses into their decision-making processes. The call for discipline among the authors of the New York Fed study suggests a desire for accountability that could resonate throughout the economic research community.
As the conversation surrounding tariffs continues to evolve, it is essential for both economists and policymakers to engage in a rigorous evaluation of the data and methodologies used in studies like the one from the New York Fed. The stakes are high, as the outcomes of these discussions can influence not only immediate economic policy but also long-term perceptions of trade and economic health in the United States. Moving forward, it will be crucial to foster an environment where robust, unbiased economic research can thrive, allowing for informed policy decisions that benefit all stakeholders involved.