The New York Federal Reserve's Liberty Street Economics blog published a study titled 'Who Is Paying for the 2025 U.S. Tariffs?' The research, by four members of the bank's research group and a Columbia University professor, found that approximately 90% of tariff costs fell on U.S. businesses and consumers rather than foreign exporters. The blog post included a standard disclaimer that the views expressed do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
On Wednesday, National Economic Council Director Kevin Hassett appeared on CNBC's Squawk Box and called the paper 'the worst paper I've ever seen in the history of the Federal Reserve system,' said it was 'highly partisan,' and stated the authors 'should presumably be disciplined.' Hassett argued the study focused only on price changes without accounting for shifts in import quantities or manufacturing effects.
Minneapolis Fed President Neel Kashkari responded Thursday, calling Hassett's remarks 'another step to try to compromise the Fed's independence,' and listed other administration actions including a DOJ grand jury subpoena of the Fed, a criminal investigation of Chair Jerome Powell, and an attempt to fire Fed Governor Lisa Cook currently before the Supreme Court.
Multiple other studies from Harvard, University of Chicago, the Kiel Institut, and the Congressional Budget Office have reached similar conclusions to the New York Fed research. The Fed's benchmark rate currently sits at 3.5%-3.75%, well above the 1% rate Trump has publicly called for.
