What's Happening?
Kevin Hassett, a top economic adviser to President Trump, has publicly criticized a study conducted by the Federal Reserve Bank of New York. The study concluded that U.S. companies bear the majority of the costs associated with tariffs. Hassett described
the study as an 'embarrassment' and called for disciplinary action against the researchers involved. He argued that the study's conclusions were partisan and based on flawed analysis. This criticism is part of a broader pattern of the Trump administration challenging economic data and research that contradicts its policy positions. The administration has previously targeted other economic institutions and figures, including the Bureau of Labor Statistics and Goldman Sachs, for similar reasons.
Why It's Important?
The criticism from Hassett highlights ongoing tensions between the Trump administration and the Federal Reserve, particularly regarding economic policy and data interpretation. The administration's stance on tariffs is a key component of its economic strategy, aimed at boosting domestic production and wages. However, the Federal Reserve's findings suggest that tariffs may be more burdensome to U.S. companies and consumers than the administration acknowledges. This dispute underscores the challenges in assessing the real impact of tariffs on the U.S. economy and could influence future policy decisions. The administration's approach to economic data could also affect the credibility and independence of key economic institutions.
What's Next?
The ongoing debate over the impact of tariffs is likely to continue, with potential implications for U.S. trade policy and economic strategy. The Federal Reserve may face increased scrutiny from the administration, which could affect its operations and decision-making processes. Additionally, the nomination of Kevin Warsh to replace Jerome Powell as Fed Chair could be influenced by these tensions, especially if the criminal probe into Powell's testimony remains unresolved. The outcome of these developments could shape the future of U.S. monetary policy and its relationship with the executive branch.
