Key Takeaways
- White House economic advisor Kevin Hassett launched unprecedented criticism against a New York Fed study yesterday (Feb 18), calling it "an embarrassment" and demanding researchers face "discipline" for concluding Americans bear 90% of tariff costs.
- Fresh social media outrage surged today as economists' warnings about $1,700 household cost impacts went viral, with users condemning tariffs as a "10% tax on everything" for middle-class Americans.
- Administration claims that tariffs "made consumers better off" through $1,400 real wage gains directly contradict new German Kiel Institute data showing foreign producers absorb only 4% of tariff costs.
- This marks the most aggressive White House intervention in independent economic research since Trump's 2025 tariff implementation, signaling escalating tension with Federal Reserve institutions.
February 19, 2026 – In a dramatic escalation of the tariff debate, the White House launched blistering attacks on Federal Reserve economists yesterday after new research confirmed American consumers shoulder nearly all costs of President Trump's sweeping 2025 tariff regime. As fresh social media fury erupts over household cost projections, the administration's war on independent economic analysis reached fever pitch with senior officials demanding academic "discipline" for findings contradicting official talking points – all within the last 24 hours.
Deep Dive Analysis
White House economic counselor Kevin Hassett's extraordinary CNBC interview yesterday (Feb 18) represents a calculated escalation in the administration's campaign against inconvenient economic data. His specific denunciation of the New York Fed paper – developed through standard trade cost modeling analyzing price reactions across 100+ tariffed products – as "analysis that wouldn't be accepted in a first-semester econ class" breaks new ground in political interference with Federal Reserve research. The study's methodology, which tracked whether foreign exporters lowered prices to offset tariffs (they didn't, 90% of the time), mirrors similar findings from the German Kiel Institute showing 96% of costs land on U.S. consumers.
Hassett's counterargument – that "real wages were up $1,400 on average last year" proving tariffs "made consumers better off" – faces immediate contradictions. The White House selectively cites temporary import price dips from mid-2025 while ignoring the NY Fed's longitudinal analysis showing tariff costs embedded in final consumer goods. Crucially, both studies isolate tariff impacts from broader inflation trends, with the Kiel Institute specifically noting exporters "accept reduced market share... while maintaining profit margins" rather than absorbing costs. This creates a direct clash between administration talking points and empirical evidence from two independent institutions published within weeks of each other.
What People Are Saying
Social media platforms exploded overnight with economists and consumers connecting yesterday's White House attack to tangible cost impacts. A viral thread from trade policy analyst @EconFactCheck (142K followers) broke down the NY Fed methodology, garnering 28K retweets with the caption: "When the White House calls reality 'embarrassing' – here's why your grocery bill keeps rising." Top comment: "They want to 'discipline' economists for arithmetic? My Costco receipt proves them right daily."
On TikTok, the hashtag #TariffTax hit 4.7M views as users shared side-by-side price comparisons of tariff-affected goods (appliances, electronics). Most shocking: verification of the Peterson Institute's $1,700 annual household cost projection now being recirculated by mainstream economists. Reddit's r/economy saw 12K upvotes on a post dissecting Hassett's wage argument: "They're counting one-time bonuses from tariff-revenue corporate tax cuts as 'permanent wage gains' while ignoring sustained price hikes. This isn't economics – it's accounting fraud."
Why This Matters
This isn't academic squabbling – it's the administration weaponizing misinformation against its own economic data apparatus months before critical midterms. With the NY Fed study providing concrete validation for Democratic arguments that tariffs function as regressive consumption taxes, yesterday's unprecedented "discipline" demand reveals panic over losing the narrative on kitchen-table economics. Crucially, the Kiel Institute's parallel findings demolish the only remaining administration defense: that foreign nations are "paying" through lower export prices (they're not). As import-dependent industries brace for renewed tariff hikes, businesses now face a crisis of data reliability when making multi-million dollar supply chain decisions. This White House overreach risks permanently damaging the Federal Reserve's nonpartisan credibility – a cornerstone of global financial stability – proving that when politics overrides economic reality, everyone pays the price.
FAQ
Q: Did the White House actually demand economists be disciplined?A: Yes. Kevin Hassett explicitly stated NY Fed researchers "should presumably be disciplined" for publishing the study, marking the first time a White House official has called for punitive action against Federal Reserve staff for research findings. Q: How do tariffs translate to consumer costs if foreign exporters don't lower prices?
A: When exporters maintain prices (as 90% did per the Fed study), U.S. importers absorb the tariff by raising consumer prices. The German study confirms only 4% of costs were passed to foreign producers – meaning Americans pay via higher retail prices. Q: Are tariffs really a "tax on everything" as social media claims?
A: Essentially yes. A universal tariff functions as a broad-based consumption tax. The Peterson Institute's $1,700 annual cost estimate for middle-class households is now validated by two independent studies, though impact varies by household spending patterns. Q: Could the Fed study be challenged for methodology?
A: The NY Fed used standard trade flow analysis (comparing tariffed vs non-tariffed goods) – methodology identical to Congressional Budget Office reports routinely cited by the White House. Hassett offered no specific methodological flaws, only partisan dismissal.
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