New York Federal Reserve President John Williams said Tuesday that U.S. companies and consumers are absorbing the vast majority of the costs from President Donald Trump’s tariffs, pushing back on White House assertions that foreign exporters are bearing the burden, CNBC reports.
Speaking at a conference in Washington, 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.
Williams added that tariffs have already led to noticeable increases in import prices, with the full economic impact still unfolding.
The findings have drawn criticism from administration officials.
National Economic Council Director Kevin Hassett recently blasted the research, calling it deeply flawed and suggesting the authors should face consequences, though he later softened those remarks.
Williams said the tariff effects have also complicated the Federal Reserve’s fight against inflation.
The New York Fed president estimates that higher trade duties have added roughly 0.5 to 0.75 percentage points to the current inflation rate, which stands near 3%. That has slowed progress toward the Fed’s long-run 2% target.
Despite the near-term pressure, Williams said he expects the inflationary impact of tariffs to prove temporary and still sees price growth returning to target levels by 2027.
He described the broader U.S. economy as being on solid footing.
Regarding monetary policy, Williams said the Fed’s current stance is appropriately calibrated to achieve stable prices and maximum employment. If inflation eases once tariff effects fade, he indicated that additional interest rate cuts could be warranted to avoid overly tight policy.
Financial markets are currently pricing in potential rate reductions later this year.
As president of the New York Fed, Williams holds a permanent vote on the Federal Open Market Committee, giving him significant influence over policy decisions.
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