2026-10-08 · contested story
Inflation on many everyday items was entirely due to tariffs, NY Fed says
In February 2026, the Federal Reserve Bank of New York published a study (Liberty Street Economics blog, 'Who Is Paying for the 2025 U.S. Tariffs?') finding that US businesses and consumers bore roughly 90% of the cost of President Trump's 2025 tariffs — 94% in the first eight months of the year, slipping to 86% by November as foreign exporters absorbed more. The study directly contradicted the administration's repeated claim that foreign countries were paying. NY Fed President John Williams reinforced this publicly in March 2026, saying US companies and consumers are absorbing the vast majority of tariff costs and that higher duties had added roughly 0.5 to 0.75 percentage points to inflation. The White House, via NEC Director Kevin Hassett, attacked the paper fiercely — calling it 'the worst paper I've ever seen in the history of the Federal Reserve System.'
How each side frames it
left
"Tariffs are collected when foreign goods arrive at the border and are paid by the business bringing them into the country. So they amount to a back-door tax increase on US businesses and consumers, and in particular hit lower-income people harder."
"“Tariff is basically a euphemism for a tax,” said Boston College economist Brian Bethune, who equated it to state sales taxes."
"“Let’s be very clear: This misguided move will raise prices on everyday goods like food, clothing and housing, at a time when families are already struggling with high costs,” New Hampshire Democratic Senator Jeanne Shaheen said"
"President Trump’s sweeping tariffs push up the cost of everything from groceries and clothes to furniture and appliances."
"The bond market gave the Federal Reserve an ultimatum: Raise rates, or we will."
center
"“Our results show that the bulk of the tariff incidence continues to fall on US firms and consumers,” the authors of the study wrote in a blog post."
"Williams cited New York Fed research estimating that most of the added costs from tariffs — potentially as much as 90% — have been passed through to domestic businesses and households."
""A couple of participants emphasized that a higher policy rate would help prevent sector-specific price increases stemming from energy market disruptions and AI-related demand from broadening out"
"Officials were unanimous in backing the September rate increase to respond to persistent inflation."
"Through June, consumers have absorbed just 22% of tariff costs — but their share is expected to jump to 67% as more US firms start to hike their prices, the report said."
right
"“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”"
"Austan Goolsbee finds that producers and importers are absorbing much of the cost of the tariffs, largely sparing the consumer from higher prices on imports."
"The US collected $30 billion in customs duties in January alone, bringing the fiscal year-to-date total to $124 billion — a 304% increase from the same period a year earlier."
"CBO proves Trump right -- tariffs cut $4 Trillion from deficit"
"“Billions of dollars, largely from countries that have taken advantage of the United States for many years, laughing all the way, will start flowing into the USA,” he wrote August on Truth Social in all-caps."
What each side left out
The left left out — covered by the New York Post & The New York Sun & Fox News (Hugh Hewitt opinion)
- Tariff revenue surge ($287 billion for 2025) and deficit reduction
- The national-security / supply-chain-resilience rationale for tariffs
- Early evidence (Goolsbee/Chicago Fed) that producers absorbed costs sparing consumers
The right left out — covered by the The Boston Globe
- The study's finding that tariffs act as a regressive tax hitting lower-income people hardest
- Yale Budget Lab estimate of $2,400 cost per average household
- Democratic framing of tariffs as largest tax hike with no congressional sign-off
The center left out — covered by the The Boston Globe & New York Post
- Explicit political characterization of tariffs as a 'tax' on Americans
- The affirmative long-term national-security case for accepting short-term price pain
The right left out — covered by the The Boston Globe
- Boston Fed finding that productivity gains offset tariff inflation (a more nuanced, not purely political, read)
The left left out — covered by the Fox News (Supreme Court PDF)
- Supreme Court ruling that IEEPA does not authorize the tariffs
What's actually true?
[verified] A NY Fed study found US businesses and consumers bore about 90% of the cost of Trump's 2025 tariffs (94% Jan-Aug, 92% Sep-Oct, 86% Nov).
[verified] NEC Director Kevin Hassett called the NY Fed paper 'the worst paper I've ever seen in the history of the Federal Reserve System' and suggested those involved should be disciplined.
[verified] The Congressional Budget Office also concluded most of Trump's import tax surge would be borne within the US via smaller profit margins and higher consumer prices.
[verified] NY Fed President John Williams estimated tariffs added roughly 0.5 to 0.75 percentage points to the inflation rate (near 3%).
[verified] A Boston Fed paper found strong labor productivity growth offset tariff-induced price increases, adding only about 0.5 percentage point to core PCE.
[verified] The US collected $287 billion in tariff revenue in calendar year 2025, nearly tripling the prior year.
[verified] The Yale Budget Lab estimated tariffs would cost the average US household $2,400 in 2025, with the average import levy at 18.6% as of August 7, 2025.
[verified] Goldman Sachs economists projected consumers' share of tariff costs would rise from 22% (through June) to 67% as firms raise prices.
The narrative clash
Who pays for the tariffs — foreigners or Americans
Left: “They’re saying the money is pouring in. That’s just not true... The taxes are remitted by the importer. They write the checks.” (economist Douglas Holtz-Eakin)
Right: “Billions of dollars, largely from countries that have taken advantage of the United States for many years, laughing all the way, will start flowing into the USA” (Trump, Truth Social)
Whether consumers are better or worse off under tariffs
Left: the University of Michigan consumer sentiment report... noted “concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread.”
Right: “Prices have gone down. Inflation is down over time. Import prices dropped a lot in the first half of the year... Consumers were made better off by the tariffs” (Kevin Hassett)
Whether tariffs are visibly driving inflation
Left: “You are starting to see scattered bits of the tariff inflation regime filter in” (Eric Winograd, AllianceBernstein)
Right: The levies have yet to show up in the inflation numbers — at least not so far.
Whether tariff inflation offsetting other forces
Left: “Productivity gains thus strongly offset the increase in consumer prices induced by tariffs” (Boston Fed researchers)
Right: “America’s average tariff rate has increased nearly sevenfold in the past year — yet inflation has cooled and corporate profits have increased” (White House spokesperson Kush Desai)
40 sources analyzed
The Boston Globe The Damage Report The Boston Globe New York Post Newsmax The New York Sun New York Post New York Post The Boston Globe New York Post The Boston Globe Yahoo Finance New York Post thestreet.com Axios AP News The New York Sun The New York Sun Fox News Al Jazeera Fox Business Politico Reuters The Boston Globe Fox News investingLive PBS Bloomberg.com Business Insider Fox News The New York Sun NBC News washingtonpost.com NPR CNN newrepublic.com TheStreet Pro U.S. News & World Report Barron's WSJ