Hassett Wants to “Discipline” the Fed for a Report He Doesn’t Like

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Authored by Mike Shedlock via mishtalk,

The Trump administration takes another smack at freedom of speech.

Who Is Paying for the 2025 U.S. Tariffs?

That question spawned nonsense from Kevin Hassett, White House economic advisor, and also CNBC in an interview.

Please consider Who Is Paying for the 2025 U.S. Tariffs? by the New York Fed.

Over the course of 2025, the average tariff rate on U.S. imports increased from 2.6 to 13 percent. In this blog post, we ask how much of the tariffs were paid by the U.S., using import data through November 2025. We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.

In the chart below [lead chart] , we plot U.S. import tariffs by month in 2025. The blue dots depict the average statutory tariff rate, weighted by 2024 annual import values. The red dots show the average duty rate by month, calculated as total duties collected divided by the value of total imports. The average tariff rate was very low at the beginning of the year, at 2.6 percent. It then spiked in April and May, when tariffs on Chinese goods were raised by 125 percentage points, before being reversed by 115 percentage points in mid-May. By the end of the year, the average tariff rate was 13 percent.

The average duty rate is lower than the average tariff rate because of the many exemptions granted. For example, although the U.S. levies a 35 percent tariff on Canadian imports, 83 percent of those imports are exempt from U.S. duties under the U.S.-Mexico-Canada Agreement (USMCA). A second reason for the lower average duties is that importers shift away from high-tariffed goods. The difference between the statutory rate and the duty rate peaked in April and May, when importers shifted away from Chinese imports in order to avoid the higher tariffs levied on Chinese goods.

Who Bears the Cost of Tariffs?

Tariff incidence is the technical term for how the costs of a tariff are split between foreign exporters and domestic importers. While importers pay the duty, the “economic burden” of the tariff can be shifted onto exporters if they lower their export prices.

In this analysis, we also allow the pass-through to change for different months in 2025. Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers. These findings are consistent with two other studies that report high pass-through of tariffs to U.S. import prices.

We highlight two main results. First, 94 percent of the tariff incidence was borne by the U.S. in the first eight months of 2025. This result means that a 10 percent tariff caused only a 0.6 percentage point decline in foreign export prices. Second, the tariff pass-through into import prices has declined in the latter part of the year. That is, a larger share of the tariff incidence was borne by foreign exporters by the end of the year. In November, a 10 percent tariff was associated with a 1.4 percent decline in foreign export prices, suggesting an 86 percent pass-through to U.S. import prices. Given that the average tariff in December was 13 percent (see the first chart), our results imply that U.S. import prices for goods subject to the average tariff increased by 11 percent (13 times 0.86) more than those for goods not subject to tariffs. These higher import prices caused firms to reorganize supply chains, as suggested by the findings presented in the two charts above.

In sum, U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.

Hassett and CNBC Nonsense

The insane part of the above clip is Hassett seeks to “discipline” a body for writing a paper that Trump doesn’t like.

Ironically, the report’s conclusion matches the vast majority of economic evidence on tariffs.

Hassett Needs a Spanking

Not only does Hassett need a spanking, so does the CNBC anchor.

Discipline Who

Excuse Me for Asking But Where Would Refunds Go?

Hassett Has No Problem Working With Pedophile Protectors

Stupid Is as Stupid Does

Trump and the administration sycophants are entitled to their own opinions but not their own facts.

Q: OK Where Is the tariff-related Inflation?
A: Wrong question

A falling rate of inflation does not imply no tariff impact. That’s a key point that no one other writer that I am aware of has addressed.

What would inflation have been in the absence of tariffs?

That’s a much better question, but of course impossible to state accurately. However, we can say lower.

Also, please note the lead chart. Trump started off with 50 percent reciprocal tariffs and escalated to 100 percent on some countries before numerous TACOs and other carveouts.

The average duty rate, is not 50 percent or even 18 percent. It’s about 8.5 percent.

Companies front ran those tariffs with massive pre-tariff imports. Those stockpiles enabled corporations to hold pat on hikes for months.

Then various TACOs lowered tariffs to 12 percent with duties still lower.

In 2025 some companies ate part of that with lower profits. The study stated “We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.”

It did not apportion the portion companies ate. In 2025 I suspect it was significant. But that won’t last forever. Indeed, it’s likely the honeymoon is already over.

The Tariff Delay Is Now Over, Companies Start Hiking Prices Again

On February 16, I noted The Tariff Delay Is Now Over, Companies Start Hiking Prices Again

Hello consumers, expect higher prices in the high single digits on many items.

On February 17, I noted Medical Care Costs Surge. What’s the Inflation Impact on PCE and CPI?

I expect a 10 percent jump in health care services. More for knock-on impacts.

So, your respite from price hikes is now over unless we have a big recession that collapses jobs and reduces demand. I certainly don’t rule that out.

And lost in the nonsense from Hassett is the fact that tariffs may (or many not) help protected industries, on net, tariffs cost jobs.

You can see the results directly in manufacturing.

On February 4, I noted Manufacturing Recovery? ADP Says Manufacturing Jobs Down 22 Straight Months

There is no manufacturing recovery.

On February 2, the ISM report revealed Manufacturing Employment Has Been Negative for 28 Months.

Tariffs were supposed to create jobs. They didn’t and won’t. But they did raise costs born by importers and consumers.

Consumers will take a bigger hit in 2026 unless there is a big collapse in demand.

Regardless, everyone should be disturbed by the administration’s blatant attack on free speech.