LEXINGTON, Virginia (Reuters) - Richmond Federal Reserve President Tom Barkin said he did not expect consumers to face the full brunt of the 25% tax the Trump administration has set on imported cars, but added firms will have difficult choices ahead on pricing and profit margins.

"My instinct is that the blunt top line number will not be the number that is faced by consumers," Barkin said. "You have to compete ... People have to face that. There are issues like exchange rates and other accommodations ... The companies are going to have to face the question of do you try to give it to the consumer, do you take it in margin, or do you lower cost somewhere else in your process."

For the Fed that could mean spillovers to the job market if firms try to limit price hikes by shedding workers.

"It creates risks on the pricing side, which is pretty straightforward," Barkin said. "But also on the operating expense, labor market."

Barkin spoke to reporters after delivering an economics lecture at Washington and Lee University focused on the pall that uncertainty about rapid-fire federal policy changes has cast over businesses and households as they make spending and investment decisions - a possible blow to overall demand in the economy.

The auto tariffs President Donald Trump announced on Wednesday are just the latest move the Fed is trying to parse to determine the effect on inflation, jobs and growth.

Barkin said he was open to arguments that tariffs might cause only a one-time shift in prices, and not generate persistent inflation, but was also "cautious" about embracing it.

"I don't start with an assumption that this is a one-time increase in the price level that you simply look through," Barkin said. "I start with the assumption that we have been through a significant inflationary period. That means expectations have been loosened...for both price setters and price receivers."

The Fed held its benchmark interest rate steady at a meeting last week that was overshadowed by extensive uncertainty about how the economy may change under Trump's influence.

Along with the potentially price-raising tariffs still being announced, tougher immigration rules may result in fewer workers, while tax cuts and regulatory changes are planned that administration officials say will boost investment and spending.

(Reporting by Howard Schneider; Editing by Chris Reese and Lincoln Feast.)