Kevin Hassett, an economic advisor to former President Donald Trump, has sparked controversy by advocating for punitive measures against Federal Reserve researchers following their recent analysis of tariffs.The report from the Federal Reserve Bank of New York concluded that 90% of the economic burden from higher tariffs falls on US firms and consumers, a finding that Hassett labeled "an embarrassment" and the "worst paper" he has encountered in the Fed's history.
Source:
businessinsider.comIn an interview with CNBC, Hassett asserted that the authors of the report should be "disciplined" for producing what he described as a partisan conclusion based on subpar economic analysis.He criticized the report for generating significant media attention that he believes is misleading.
Source:
businessinsider.comThe analysis revealed that the average tariff rate had surged to 13% from just 2.6% in 2025, reflecting the impact of Trump's aggressive trade policies introduced last year.
Source:
businessinsider.comHassett defended the rationale behind the tariffs, arguing that they are intended to shift demand back to US producers, thereby benefiting American consumers and workers in the long run.He stated, "If we bring the stuff home, create the demand at home, then that will hurt China and drive up wages in the US" However, this perspective has been met with skepticism by some economists and critics who caution against the potential negative effects of such tariffs on the broader economy.
Source:
businessinsider.comThe timing of Hassett's comments is particularly noteworthy as the independence of the Federal Reserve is under scrutiny.Ongoing criminal investigations involving Fed Chair Jerome Powell and other officials have raised questions about the influence of the Trump administration on the central bank's operations.
Source:
businessinsider.comClaudia Sahm, a former Fed economist, expressed alarm over Hassett's remarks, calling for scrutiny of Kevin Warsh, Trump's nominee to replace Powell.She emphasized the importance of Fed independence and the dangers of suppressing research that contradicts government policy.
Source:
businessinsider.comSteve Sosnick, chief strategist at Interactive Brokers, echoed these concerns, describing Hassett's remarks as "distressing." He warned that such statements could chill dissenting voices within the Fed and compromise its autonomy.
Source:
businessinsider.comThis situation highlights the ongoing tensions between the Trump administration's trade policies and the independent research conducted by the Federal Reserve.While tariffs are intended to protect domestic industries, they also carry the risk of retaliatory actions from trading partners, potentially leading to a protracted trade war.
Source:
epi.orgThe complexities of tariffs as a tool for economic policy continue to fuel debate regarding their efficacy and long-term implications for the US economy.As the discussion evolves, stakeholders in the economic community will be closely monitoring how these dynamics unfold, particularly in light of Hassett's provocative call for disciplinary action against Fed researchers.The outcome could have significant implications for the future of US economic policy and the role of independent research in informing it.
Sources:
businessinsider.comepi.orgIn summary, the intersection of politics and economic policy remains fraught with challenges, as the Trump administration's approach to tariffs continues to elicit strong reactions from both supporters and critics alike.The debate underscores the critical need for objective economic analysis in shaping policies that affect consumers, businesses, and the overall economy.
