US Stocks: Trump Adviser Hassett Suggests New York Fed Researchers Be Punished for Tariffs Argument

Why It Matters

The episode underscores how partisan pressure can threaten the perceived independence of monetary‑policy research, potentially shaping future trade‑policy debates and market confidence.

Key Takeaways

• Hassett calls Fed paper “shoddy scholarship.”
• Paper claims tariffs burden U.S. consumers.
• Hassett demands disciplinary action for researchers.
• Debate highlights politicization of economic research.
• Market reacts with mixed S&P 500 moves.

Pulse Analysis

The clash between Kevin Hassett and the New York Federal Reserve illustrates a growing trend of political figures challenging academic rigor within central‑bank institutions. Hassett’s condemnation of the tariff‑impact paper, which aligns with former President Trump’s narrative that import duties primarily affect domestic consumers, reflects a broader effort to frame economic data in partisan terms. By labeling the research as the "worst" in Fed history, he not only attacks its methodology but also signals a willingness to intervene in scholarly discourse when findings conflict with policy goals.

Such public disputes raise concerns about the autonomy of the Federal Reserve’s research arm. Central banks rely on independent analysis to guide monetary policy and inform public debate; when researchers face the prospect of disciplinary action for their conclusions, academic freedom may be eroded. This could lead to self‑censorship, reduced transparency, and a narrowing of the policy toolkit available to policymakers. Moreover, the episode may embolden other political actors to question or suppress data that contradicts their agendas, potentially undermining the credibility of economic institutions.

Investors responded with a mixed market snapshot, as the S&P 500 saw both notable gainers like Insulet and Robinhood and significant losers such as Palo Alto Networks. The volatility suggests that traders are weighing the implications of heightened political scrutiny on economic research against broader macro‑economic factors, including ongoing trade tensions. In the longer term, the episode may influence how analysts assess the reliability of Fed‑produced data, prompting a more cautious approach to policy‑driven market forecasts and reinforcing the need for clear boundaries between political advocacy and independent economic analysis.

US Stocks: Trump adviser Hassett suggests New York Fed researchers be punished for tariffs argument

Reuters · Feb 18 2026, 08:56 PM IST

Kevin Hassett, a top economic adviser to former President Donald Trump, said on Wednesday that the authors of a New York Federal Reserve research paper – which argued that the costs of tariffs are borne mostly by Americans – should be punished for what he described as “shoddy scholarship.”

“The paper is an embarrassment,” Hassett said in a CNBC interview. “It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve System,” and “the people associated with this paper should presumably be disciplined for writing it.”

The paper contended that Trump’s large import‑tax increases are borne by those in the United States rather than by foreigners, echoing the administration’s long‑standing position. Its findings have been repeated elsewhere.

Market snapshot (as of 18 Feb 2026, 08:39 PM IST)

S&P 500 Top Gainers

• Insulet – 269.36 (+9.34 %)

• Cadence Design Systems – 303.64 (+7.12 %)

• Robinhood Markets – 77.94 (+6.82 %)

• Molina Healthcare – 137.81 (+6.82 %)

S&P 500 Top Losers

• Palo Alto Networks – 150.19 (‑8.14 %)

• Norwegian Cruise Line – 24.17 (‑7.57 %)

• NVR – 7,531 (‑7.27 %)

• Expedia Group – 206.32 (‑6.41 %)

Hassett, the director of the White House’s National Economic Council, said the New York Fed researchers “have put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first‑semester econ class.”

The New York Fed did not immediately respond to a request for comment.

Synopsis

The paper argued that Trump’s large import‑tax increases are borne by those in the U.S., rather than by foreigners, as the administration has long argued. The findings in the New York Fed paper have been echoed elsewhere.