Trump Adviser Wants Economists "Disciplined" for Contradicting Tariff Claims

"The people associated with this paper should presumably be disciplined."

Kevin Hassett, White House National Economic Council Director, didn't mince words Wednesday morning on CNBC. His target? New York Federal Reserve researchers whose crime was publishing findings that contradict the Trump administration's tariff messaging.

The paper in question found that 94% of tariff costs imposed in 2025 are being shouldered by U.S. importers and consumers—a direct challenge to Trump's repeated claims that China pays the tariffs.

The Numbers Game

Hassett dismissed the research as "an embarrassment" and "the worst paper I've ever seen in the history of the Fed system." He argued that tariffs will reshore American jobs, boost demand, and ultimately raise wages—a rosy scenario that current data doesn't support.

U.S. manufacturing has been shedding jobs since April last year, largely due to tariff uncertainty. Meanwhile, the nonpartisan Congressional Budget Office reached similar conclusions to the NY Fed: businesses absorb about 30% of tariff costs through reduced profit margins, while 70% gets passed to consumers as higher prices.

The research aligns with decades of economic consensus: tariffs function as a consumption tax, with costs ultimately flowing to end users.

Academic Independence Under Fire

Hassett's call for "discipline" crosses a dangerous line from policy disagreement into academic intimidation. This isn't the first time the administration has targeted researchers. Last year, Trump suggested Goldman Sachs CEO David Solomon should "get himself a new economist" after the firm published analysis showing tariff costs would likely hit consumers.

Claudia Sahm, former Fed economist and current chief economist at New Century Advisors, called Hassett's comments "deeply disturbing." The pattern suggests a broader strategy to silence inconvenient research rather than engage with its findings.

The Bigger Picture

The clash reveals a fundamental tension between political messaging and economic reality. While tariffs serve as powerful symbols of "America First" policy, their actual effects are more complex and often counterproductive to stated goals.

Most economists agree that tariffs are essentially taxes on imports that get passed along to consumers. The NY Fed study simply quantified what economic theory predicts. But in an era where data itself becomes partisan, even basic research findings face political backlash.