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Hassett: Fed researchers should be punished for Trump tariff analysis

President Trump’s top White House economic adviser suggested Thursday that a group of Federal Reserve researchers should be punished for a paper exploring the costs of Trump’s tariffs.

In a Thursday interview, National Economic Council Director Kevin Hassett condemned a new paper from Federal Reserve Bank of New York economists, who found that consumers paid for 90 percent of the cost of Trump’s import taxes. 

“The paper is an embarrassment,” Hassett said during an interview with CNBC’s “Squawk Box”. 

“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,” he continued, accusing the researchers of reaching “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.”

The paper in question was written by three researchers at the Federal Reserve Bank of New York — one of the 12 regional reserve banks in the broader Fed system — and an economics professor at Columbia University, where Hassett also taught in the late 1980s and early 90s. 

Regional Fed branches often publish research from staff and affiliated economists, but those reports are not considered official stances or projections from the Fed system.

Hassett argued that the New York Fed’s research erred in focusing only on how much Trump’s tariffs have increased prices while ignoring their role in boosting U.S. manufacturing. 

While Trump has secured billions of dollars in domestic investment commitments from foreign countries through his tariffs, manufacturing employment declined on net during his first year, according to the Bureau of Labor Statistics.

The economic adviser also argued that both prices and inflation have gone down because of Trump’s tariffs. The 2.4 percent annual inflation rate in January, as measured by the consumer price index, is down slightly from the 2.7 percent annual inflation rate in November 2024, and it rose to as high as 3 percent in September of last year.

Hassett’s criticism is the latest White House attack on the Fed, which is facing a criminal probe from the Justice Department over Fed Chair Jerome Powell’s handling of renovations to the bank’s headquarters. 

The Supreme Court also held oral arguments last month in a case challenging Trump’s attempt to fire Fed board member Lisa Cook, which could drastically increase the president’s control over the independent central bank.

Hassett’s call for discipline over the New York Fed paper is also notable given his own history at the Fed, where he served as a research economist from 1992 to 1997. 

Claudia Sahm, a former Fed research director who has been critical of Trump’s efforts to weaken the bank’s independence, called Hassett’s comments “deeply disturbing.” 

She also said senators should question Federal Reserve chair nominee Kevin Warsh about the matter during his eventual confirmation hearing.

“The Fed Chair has the ability to suppress research from the Fed. Will he if it disagrees with White House?” Sahm said.

Other Hassett critics alluded to his own history of erroneous projections and analyses. 

Hassett was the co-author of a 1999 book “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market,” which predicted the Dow Jones Industrial Average would hit 36,000 by 2004. 

The Dow, however, fell from roughly 10,300 points in September 1999 to less than 7,600 points during the nadir of the 2002 stock market crash. The index did not eclipse 36,000 points until December 2021.

Hassett also drew intense scrutiny in 2020 while serving as director of Trump’s White House Council of Economic Advisers (CEA). During a May 2020 briefing on the pandemic, CEA released a chart that appeared to project COVID-19 deaths ceasing by the middle of that month.

At the time, roughly 87,000 Americans had died of COVID-19, according to data from the Centers for Disease Control and Prevention. More than 392,000 Americans had died from COVID-19 by the end of 2020.

“I did not realize that Hassett thought researchers should be disciplined for bad work,” wrote Martha Gimbel, executive director at the Yale Budget Lab and a member of former President Biden’s CEA.

“Others have research work that has … not stood up to pressure testing,” Gimbel added.

Copyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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