Did you know that a staggering 94% of tariff costs may be borne by American consumers, not foreign exporters? A new paper from the New York Federal Reserve has ignited a fiery debate, asserting that US citizens and businesses are carrying the significant burden of tariffs imposed last year. Initially, the study found a shocking 94% of these costs were absorbed domestically in the first eight months of 2025, with foreign exporters bearing only a minimal 6%. Although this pass-through rate saw a slight decline to 86% by November, the conclusion remains stark: US firms and consumers continue to bear the bulk of the economic weight. This finding has provoked a furious response from the Trump administration. National Economic Council Director Kevin Hassett vehemently dismissed the paper as “an embarrassment” and “the worst paper” ever seen from the Federal Reserve System, even suggesting the authors should be disciplined for releasing what he called partisan analysis. Hassett argues that the study narrowly focuses on price changes, neglecting broader economic improvements like lower inflation and higher real wage gains that he says ultimately benefit consumers. Meanwhile, the study’s authors also noted that the higher import prices forced firms to reorganize their supply chains, a dramatic shift in business operations. What do you think about these controversial findings? Make sure to subscribe to our channel for more breaking economic news and in-depth analysis!
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