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The Trump administration is disputing a new paper from the New York Federal Reserve asserting that US consumers and businesses are bearing the bulk of the higher costs from tariffs imposed last year.
"The paper is an embarrassment," National Economic Council Director Kevin Hassett told CNBC on Wednesday. "I think it's 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."
Authors Mary Amiti, head of labor and product markets at the New York Fed's Research and Statistics Group, along with research analyst Chris Flanagan and research economist Sebastian Heise, analyzed the tariffs instituted last year and found that 94% were borne by the US in the first eight months of 2025. Just 6% of those costs were absorbed by foreign exporters.
The analysis covered 12-month changes from January 2024 through November 2025 (the most recent available data). The analysis also noted how the pass-through of costs changed over the course of 2025. For instance, by November, the pass-through of costs borne in the US had declined to 86%.
Read more: The latest news and updates on Trump's tariffs
The authors said their results show that a 10% tariff led to only a 0.6 percentage-point decline in foreign export prices. But they also found that the tariff pass-through into import prices declined later last year, as more exporters bore the costs of tariffs. In November, a 10% tariff was associated with a 1.4% decline in foreign export prices, though still an 86% pass-through to US import prices.
The authors said the higher import prices caused firms to reorganize their supply chains.
"In sum, U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025," the authors wrote.
Hassett maintains that tariffs affect a multitude of price factors, including supply and demand, which shift around consumer and producer surpluses.
"They’re basically only looking at changes in prices," Hassett said.
He pointed to other metrics, such as lower inflation and higher wages, which suggest consumers are better off.
"Incomes are up way more than the cost of living, and that's the real wage gain that this silly Fed study neglects to mention," Hassett said.
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