Richmond Fed president Tom Barkin said Wednesday that the back-and-forth on President Trump’s tariffs — which were struck down by the US Supreme Court, then reinstated through other means — adds to uncertainty for businesses and the economy.
“Businesses still feel that heightened uncertainty, and that has something to do with why you see such a low hiring rate and why people aren’t leaning into investments the way that they might,” Barkin told Yahoo Finance in an interview. “Hard to know where that’s going from here, but I’m not seeing a big pickup on the job growth side.”
Last week, the Supreme Court struck down Trump’s “Liberation Day” tariffs issued under emergency economic powers, finding that the law did not give him that authority. The president responded with an immediate 10% global tariff. He’s also seeking to raise that rate to 15% and impose new tariffs on specific sectors.
Barkin said he’s assuming tariff refunds will ultimately be issued, creating the potential for lowering prices. He sees the tariffs as a sort of corporate tax cut because tariffs hit importers and the rebates will be felt mostly along the supply chain.
“Maybe some of it will go to the consumer, but a lot more of it will go to the people in the chain,” he said.
Read more: 5 ways to tariff-proof your finances
Aside from tariffs, Barkin is “cautiously optimistic” that inflation will continue to come down this year. He said the businesses he speaks to “feel like they’re about done with price increases” because consumers have pushed back.
“I just think you’ve got a consumer that’s exhausted with price increases and just not going to take it anymore,” Barkin said. “I’m hopeful that inflation is going to come down, and I can see it in some of the behaviors and dynamics.”
On the job front, Barkin said he’s been reassured by the past few jobs reports. The question is whether the Fed needs to cut rates further to boost the demand side amid low hiring. The Fed cut interest rates three times at the end of last year to bolster the job market.
“I’ve been reassured by the labor market, also by the demand side, which has stayed relatively healthy, and I think that’s the question is whether you need to put more in there on the rate side to help bolster demand,” he said.
Barkin appeared cautious on a new research report from Citrini Research that warns artificial intelligence could lead to mass white-collar layoffs, triggering a drop in consumer spending and a recession.