White House Escalates Attacks on Federal Reserve Amid Tariff Dispute
The Trump administration is intensifying its criticism of the Federal Reserve, sparking concerns about the central bank’s independence. The latest clash centers on a New York Fed research paper that found American businesses and consumers are bearing the brunt of President Trump’s tariffs.
Hassett Calls for Discipline of Fed Economists
Kevin Hassett, director of the National Economic Council, publicly urged that the economists responsible for the New York Fed study be “disciplined.” He labeled the paper “an embarrassment” and claimed its analysis wouldn’t be accepted in an introductory economics course. Hassett specifically criticized the paper’s focus on price-related effects, arguing it didn’t fully consider the benefits of the tariffs.
Fed Officials Push Back Against Political Interference
The White House’s actions have drawn sharp rebuke from within the Federal Reserve. Minneapolis Fed President Neel Kashkari described Hassett’s comments as another attempt to compromise the Fed’s independence, referencing previous instances like a Department of Justice subpoena related to building expenses. Fed Chair Jay Powell previously accused the administration of political interference after a criminal probe was launched into his conduct regarding a renovation project.
A Pattern of Conflict
This isn’t an isolated incident. The administration has repeatedly criticized the Fed for not lowering borrowing costs more quickly. President Trump has even sought to remove Fed governor Lisa Cook, alleging mortgage fraud – accusations she denies. This marks the first time a president has attempted to remove a Fed governor.
The Tariff Impact: Who Really Pays?
The New York Fed paper revealed that nearly 90% of the cost of Trump’s tariffs in 2025 was passed on to American businesses and consumers. While the administration disputes these findings, several other studies – including those by economists at Harvard and the University of Chicago, the Kiel Institut, and the Congressional Budget Office – have reached similar conclusions.
Maintaining Focus Amidst Turmoil
Despite the escalating political pressure, Fed officials are attempting to remain focused on their core objectives: maximum employment and stable prices. Kashkari stated that the Fed is “tuning out the noise” and “doubling down” on its mission.
What’s at Stake: The Fed’s Independence
The ongoing conflict raises fundamental questions about the independence of the Federal Reserve. A central bank free from political influence is considered crucial for maintaining economic stability and fostering public trust. The administration’s attacks threaten this principle, potentially undermining the Fed’s ability to effectively manage monetary policy.
FAQ
- What are tariffs? Tariffs are taxes imposed on imported goods.
- Why is the Fed’s independence key? An independent Fed can make decisions based on economic conditions, not political pressure.
- What did the New York Fed paper find? The paper found that American consumers and businesses are paying most of the cost of Trump’s tariffs.
- Has a president ever tried to remove a Fed governor before? Yes, President Trump has attempted to remove Lisa Cook.
Pro Tip: Stay informed about economic policy by following reports from the Federal Reserve and independent economic research institutions.
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