The conservative Wall Street Journal editorial board was outraged after one of President Donald Trump’s top economic advisers appeared to threaten punishment against Federal Reserve economists for publishing a study that showed Trump’s tariffs are costing Americans billions of dollars.
“The paper is an embarrassment. It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve System,” Hassett told a CNBC anchor. “The people associated with this paper should presumably be disciplined, because what they’ve done is they’ve put out a conclusion that has created a lot of news, that’s highly partisan, based on analysis that wouldn’t be accepted in a first-semester econ class.”
None of this is okay, wrote the board.
“If the tariffs are such an unambiguous economic and political winner, why is the Administration so defensive about them?” wrote the board. “Clearly the White House is worried that voters might conclude this research aligns with their own experience.”
For all of Hassett’s bluster, the board wrote, the paper’s findings that 90 percent of the tariffs are paid by U.S. consumers and businesses “aligns with other research into the distribution of tariff costs from Harvard economists and Germany’s Kiel Institute — and with common sense.”
“There isn’t widespread evidence that foreign producers are cutting their prices to offset the tariffs, the main mechanism by which foreigners would ‘pay’ for the border taxes. Nor is the dollar strengthening, which is the other possible mechanism for making foreigners pay (we’ll spare you the equations),” the editors said.
The simple fact is, wrote the board, “The Trump economy has been as healthy as it is despite the tariffs, not because of them. The market response to his April 2025 ‘liberation’ tariffs was so negative that the President quickly withdrew them and negotiated lower tariffs as part of ‘trade deals’ that may turn out to be partly illusory” — all while exempting favored companies from the tariffs and encouraging more investment into what increasingly looks like an AI bubble.
“Mr. Trump’s ire at current Fed Chairman Jerome Powell increased the more Mr. Powell warned that tariffs might raise prices,” wrote the board — and Trump appears to be putting similar pressure on his nominee to replace Powell, Kevin Warsh. “Here’s a better idea: If your tariff policy is so unpopular that you have to bully the central bank into not talking about it, maybe it’s time for a new policy.”
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