"The truth is like a lion. You don't have to defend it. Let it loose and it will defend itself." — Saint Augustine.
Well then. The lion is out of the cage.
John Williams, president of the New York Fed — the guy who has a permanent vote on the FOMC and isn't exactly some left-wing revolutionary — took the stage at a conference in Washington this Tuesday and said what anyone with two functioning brain cells already knew: Trump's tariffs are being paid, overwhelmingly, by American businesses and consumers.
Not by China. Not by foreign exporters. Not by the globalist boogeyman.
By you. By the guy buying a TV at Best Buy. By the company importing components to build your car.
The study the White House wanted to bury
It gets even juicier when you understand the context.
A few weeks ago, the New York Fed itself published a white paper — a technical study, with data, methodology, that boring stuff serious people do — showing that up to 90% of the additional cost of tariffs was passed on to domestic producers and consumers. Ninety percent. That's not a scratch. That's a sledgehammer.
And what was the White House's reaction? Kevin Hassett, director of the National Economic Council, went on CNBC and said the researchers should be "disciplined." He called the study "the worst paper I've ever seen in the history of the Federal Reserve system."
Read that again: the president's top economist wants to punish researchers for publishing data that contradicts the political narrative.
That has a name, folks. And it's not "meritocracy" or "free market." It's what Nassim Taleb would call the intellectual yet idiot — the credentialed fool who wants to silence anyone with the numbers stacked against him. Hassett walked it back later, of course. They always do when the lights come on.
The inflation that won't go away
Williams didn't stop at the diagnosis. He put numbers on the damage.
According to his estimate, tariffs are adding between 0.5 and 0.75 percentage points to the current inflation rate, which is running around 3%. For those who don't speak economist: the Fed has a 2% inflation target. We're at 3%. And at least a quarter of that gap is directly the fault of tariffs.
In Williams' own words: "Progress toward the 2% goal has temporarily stalled because of the effects of tariffs."
Translated from Fed-speak to plain English: tariffs are blocking the rate cuts everyone's been waiting for.
And here lies the paradox the market pretends not to see. Trump pressures the Fed to cut rates. At the same time, he imposes tariffs that generate inflation that prevents the Fed from cutting rates. It's like the guy who sets his house on fire and then complains the firefighters are taking too long.
The "optimistic" take — with heavy air quotes
Williams, being the good bureaucrat he is, tried to throw cold water on the doomsday narrative. He said the American economy "appears to be in a good position" and that he expects the inflationary impact of tariffs to be temporary, with the Fed hitting its 2% target by around 2027.
2027, my friend. It's March 2026.
In other words, the Fed's "temporary" has the same elasticity as that "temporary" road construction on your street that lasts three years.
He also signaled that once the tariff effects pass, new rate cuts would be justified "to prevent monetary policy from becoming inadvertently more restrictive." The futures market is already pricing in cuts starting in July or September of this year.
What this means if you have skin in the game
If you have money invested — in American stocks, in dollars, in foreign fixed income — pay attention to this: there is an open conflict between the political narrative and the actual economic data.
The White House says tariffs are paid by foreign exporters. The central bank says 90% lands on Americans. One of them is lying. And data doesn't usually have an electoral agenda.
Williams has a permanent vote on the FOMC. He didn't speak by accident. He didn't cite the study by accident. This is an institutional message: the Fed is not going to bow to political pressure to cut rates while tariff-driven inflation is in the way.
If you bet on rate cuts in the first half of the year, you'd better revisit your thesis.
And if you believe a trade war is a game with no cost... well, ask the American consumer how much more they're paying for a refrigerator today.
The bill always comes due. The only question is who pays it. And now the Fed has answered.
