President Donald Trump's longtime economic adviser Kevin Hassett suggested on CNBC Wednesday that the economists at the New York Fed who produced an analysis revealing 90 percent of Trump's tariffs are paid by U.S. companies and consumers, should face punishment of some kind.
"The paper is an embarrassment. It's, I think, the worst paper I've ever seen in the history of the Federal Reserve System," said Hassett, who was recently in the running for Trump's next nominee to lead the Fed. "The people associated with this paper should presumably be disciplined, because what they've done is they've put out a conclusion that 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 went on to claim that the paper is flawed because it assumes that "quantities don't move at all," and that "The basic theory of President Trump's tariffs is, sure, we're importing stuff from China, but we've got producers in the US who make stuff, maybe at a slightly higher place. If we bring the stuff home, create the demand at home, then that will hurt China and drive up wages in the US and American consumers will be better off ... consumers were made better off by the tariffs."
Tariffs mostly falling on domestic consumers is supported by the overwhelming consensus of economists, and recent data have indicated that contrary to Hassett's claim, the tariffs are hurting growth.
In coming days, the Supreme Court is preparing to issue a ruling that is expected to sharply limit Trump's ability to declare tariffs without legislation from Congress — but sources say the White House is working on a plan to circumvent this.