White House economic advisor says authors of New York Fed tariff report should be 'disciplined'
'It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system,' Kevin Hassett says about a report that says most tariff burdens being borne by US companies, consumers
ISTANBUL
White House economic advisor Kevin Hassett said Wednesday that the authors of a recent New York Federal Reserve report that said US companies and consumers are bearing most of the tariff burden should be “disciplined.”
“I mean, the paper is an embarrassment,” Hassett told the CNBC network. “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, because what they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class.”
He said central bank researchers only looked at pricing, ignoring important facets of how the duties operate.
The study should have also taken into account how moving more production onshore affects salaries and benefits for American businesses, according to Hassett.
The paper was posted on the New York Fed's website Feb. 12.
In essence, researchers examined whether nations that export goods to the US were raising their prices and passing them on to businesses and consumers, or dropping their prices, to absorb the tariffs.
Although the effect diminished somewhat as the year went on, the report concluded that almost 90% of the additional expenses resulting from tariffs were being passed on.
Hassett, however, said the tariffs were the cause of a higher standard of living and had no effect on prices. “Prices have gone down. Inflation is down over time. Import prices dropped a lot in the first half of the year, that leveled off, and real wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs,” he said.
“So, consumers couldn’t have been made better off by the tariffs, if this New York Fed analysis was correct. It’s really just an embarrassment. I can’t imagine who signed off on it," Hassett added.
The annual inflation in the US eased to 2.4% in January, while rising 2% since April, when President Donald Trump first announced the tariffs.
