Tariffs Won’t Help Poor Americans

The Trump tariffs are even worse than you think: As the Trump Administration’s evolving tariff policies continue to dominate the news cycle, FREOPP Visiting Fellow Matthew Klein makes the case that the tariffs proposed so far amount to a tax hike worth two percent of national income—an increase targeted such that the poor will suffer disproportionately. He argues that tariffs in general are bad because they are a form of fiscal tightening, and the specific tariffs in play now are the result of exceptionally weak analysis. He also notes that while trade and current account deficits are not always benign, they are also not inherently bad. Bottom line? The tariff hikes will harm Americans, they will harm people in the rest of the world, and they will mostly likely fail to accomplish the Administration’s goals.

→ To dig deeper, listen to Matthew discuss tariffs’ effects on manufacturing and more on the Plain English with Derek Thompson podcast.

The Fed’s tariff blind spot and how to correct it: Meanwhile, FREOPP Visiting Fellow Jackson Mejia argues that the Federal Reserve’s traditional focus on inflation targeting is outdated in a world where tariff shocks and geopolitical events now drive significant market volatility. He highlights a proposal by economists Ricardo Caballero, Tomás Caravello, and Alp Simsek to target the Financial Conditions Index (FCI) instead, which measures real-time indicators like stock prices, credit spreads, and housing values. This approach would allow the Fed to respond more directly to market instability caused by unpredictable trade policy changes, rather than relying on slow, backward-looking interest rate adjustments. Reducing volatility is essential if policymakers want to protect middle- and lower-income Americans while maintaining control over inflation. That’s why Jackson urges both the Fed and Congress to seriously consider adopting this approach to safeguard economic stability in an increasingly turbulent global environment.

Utah tackles welfare cliffs: In a reform that positions the state as a national leader in innovative welfare policy, Utah recently addressed its “welfare cliffs,” which occur when small income gains result in steep benefit losses, discouraging work and self-sufficiency. Led by Rep. Tyler Clancy and informed by research by FREOPP Senior Fellow Michael Tanner, the state launched a $6 million, three-year pilot program to help families navigate these cliffs through financial planning, community mentorship, and data-driven interventions. Other states should follow Utah’s example and empower families to increase income without fear of losing crucial benefits.

Patent thickets are pricing Americans out of medicine: Patents should fuel progress and innovation, but all too often pharmaceutical companies exploit the U.S. patent system by creating “patent thickets”—numerous overlapping patents based on minor drug changes—to extend exclusivity and delay cheaper generics, inflating health care costs. Patent reform is vital; unfortunately, the PREVAIL Act currently being considered in Congress would move the law in the wrong direction. FREOPP Visiting Fellow Grant Rigney analyzes the bill at FREOPP’s OPPBlog, concluding that it would extend monopolies and keep prices high. A better solution would be to strengthen—not weaken—the Patent Trial and Appeal Board, which helps eliminate weak patents and facilitate generics, rewarding genuine innovation without prolonging monopolies.

FREOPP leadership transition: In case you missed it, in late March, FREOPP co-founder Avik Roy stepped down as President, handing the reins to Akash Chougule. Avik will remain involved with FREOPP as a scholar and board member, and Akash will lead FREOPP’s next phase of growth as the organization works to develop bipartisan, pro-liberty solutions to America’s greatest social and economic challenges. Read Avik’s discussion of FREOPP’s next chapter and Akash’s vision for the future at The FREOPP.org Substack.

Thanks for keeping up with FREOPP, and have a great weekend!

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