New York Fed’s Williams says tariff burden falls ‘overwhelmingly’ on the U.S.

New York Federal Reserve President John Williams issued a statement Tuesday opposing the White House’s claims, saying American consumers and businesses are taking the biggest hit from President Donald Trump’s tariffs.

“Tariffs are largely borne domestically – the New York Fed analysis estimates that much of the burden falls on US firms and consumers,” Williams said at a conference in Washington, D.C. he said. “Additionally, tariffs have already meaningfully increased U.S. prices of imported goods, and their full effects have likely yet to be felt.”

The study Williams cites has sparked quite a bit of controversy over the past few weeks.

One white paper A research team published on the New York Fed’s website found that nearly 90% of the additional costs resulting from tariffs are passed on to domestic producers and consumers. Trump and other White House officials had insisted that exporters absorb the costs rather than raise prices.

National Economic Council Director Kevin Hassett fueled the debate in an appearance on CNBC, arguing that researchers needed to be “disciplined” in what he called “the worst paper I’ve ever seen in the history of the Federal Reserve system.” Hassett later retracted the criticism.

Addressing the issue publicly for the first time, Williams said the tariffs were not only being felt at home but were also preventing the Fed from reaching its 2% inflation target.

“My current estimate is that the increase in tariffs to date has contributed about one-half to three-quarters of a percentage point to the current inflation rate of about 3 percent,” he said. “The FOMC defines price stability as 2 percent inflation over the long term. Due to the effects of the tariffs, progress toward this goal has temporarily stalled.”

On the bright side, Williams said he still expects the tariff impact on inflation to be temporary and thinks the Fed will hit its target by 2027. He added that the U.S. economy “appears to be on good footing.”

As for current policy, he said the Fed is “well positioned” to achieve its dual mission goals of stable prices and full employment. If inflation trended downward after the tariff effect was eliminated, “further reductions in the federal funds rate would eventually be warranted to prevent monetary policy from becoming unintentionally more restrictive.”

Markets expect the Fed to continue cutting interest rates later this year, possibly in July or September. current futures pricing. As president of the New York Fed, Williams has extra influence over the Federal Open Market Committee, of which he is a permanent voting member.