MNI BRIEF: US Firms Now Cautiously Optimistic On Tariffs-Daly

Federal Reserve Bank of San Francisco President Mary Daly said Thursday firms in her district are now "cautiously optimistic" about their ability to grow in spite of the material hike in tariffs this year, rather than waiting to see how trade policy will settle. 

"What I heard originally was we're going to wait and see, but now that the direction of travel on tariffs seems to be negotiation to lower rates than were announced on Liberation Day, and tax policy and other things have passed, people are already seeing that they can work in this system," she told an economic conference in Victor, Idaho. "I see cautious optimism." 

The effective tariff rate as of last week was about 16%, but tariff revenue is just 8%, "so that tells you there's some splitting, there's some work arounds. Companies are very innovative and figuring out the ways to do things." 

Daly repeated her view that the U.S. economy is "in a good place" and the FOMC's median projection for two rate cuts for this year is "a reasonable outlook to have." (See: MNI INTERVIEW: Fed's Daly: Time To Think About Adjusting Rates)

"If we wait until inflation gets to 2%, then we've likely injured the economy in some way that's completely unnecessary."