US Trade Representative Jamieson Greer discusses President Donald Trump’s decision to raise tariffs on South Korea and an India-EU trade deal on ‘Kudlow’.
White House economic adviser Kevin Hassett on Wednesday called for the New York Federal Reserve to punish economists who published a research paper finding that most of the burden of the Trump administration’s tariffs falls on American businesses and consumers.
“The paper is a disgrace. It is, I think, the worst paper I have ever seen in the history of the Federal Reserve system,” Hassett said in an interview on CNBC.Squawbox.”
“The people involved in this article should probably be disciplined because what they have done is they have released a conclusion that has generated a lot of news that is highly biased based on analyzes that would not be accepted in a first semester econ class,” Hassett continued.
Research from the New York Fed found that US businesses and consumers accounted for 86% of total revenue tariff chargewhile foreign exports bore 14% of the burden as of November 2025. The researchers found that the share carried by U.S. businesses and consumers fell over the year, from 94% in the January through August period and 92% in September and October.
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Kevin Hassett, director of the National Economic Council, called on New York Fed researchers to be punished for their research findings that the U.S. is bearing most of the cost of the tariffs. (Aaron Schwartz/CNP/Bloomberg/Getty Images)
They also found that the average rate increased last year Trump administration increased import duties from 2.6% at the beginning of 2025 to 13% at the end of this year. The report shows that the average rate peaked at around 16% in April and May, following the president’s announcement of his “Liberation Day” tariffs.
“Our results show that the bulk of tariff impacts continue to fall on U.S. businesses and consumers,” the New York Fed wrote, noting that its findings were consistent with some recent studies of U.S. import tariffs showing that U.S. importers are absorbing nearly all of the costs.
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President Donald Trump announced a dramatic tariff increase during his “Liberation Day” event in April 2025, although some tariffs were implemented at lower levels than those he unveiled. (Chip Somodevilla/Getty Images)
These findings are also consistent with those from another analysis from the nonpartisan Congressional Budget Office (CBO), which noted in its recently released Ten-Year Budget and Economic Outlook that foreign exporters account for about 5% of tariff costs, while the remaining 95% are borne by U.S. businesses and consumers.
The CBO found that U.S. companies would pass on about 70% of their revenue tariff costs for consumerswith the remaining 30% coming from their profit margins. After accounting for domestic producers raising prices because of reduced foreign competition, the “net effect of tariffs is to increase U.S. consumer prices by the full share of the costs of the domestic tariffs (95 percent),” the CBO found.
CBO’s analysis also projected that the new rates imposed over the past year will increase the personal consumption expenditures (PCE) index by a total of about 0.8 percentage points by the end of 2026. The Fed’s favorite inflation gauge and was last at 2.8% in November, well above the Fed’s 2% target.
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Hassett then defended the Trump administration’s tariffs during the CNBC interview, saying that American consumers are better off for them, saying the New York Fed’s analysis was “a shame.”
“Prices have fallen. Inflation has fallen over time. Import prices fell sharply in the first half of the year but stabilized, and real wages rose an average of $1,400 last year, meaning consumers are better off because of the tariffs,” Hassett told CNBC.
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“So consumers could not have been better off because of the rates if this analysis from the New York Fed was correct. It’s really just a shame,” Hassett said.
