The Trump administration's tariff moves are turning U.S. trade policy on its head and fueling concerns about the U.S. economic outlook.
So will tariffs send the U.S. into a recession?
And if so, what might that recession look like?
I'm Alison Nathan, and this is Goldman Sachs Exchanges.
Each month, I speak with investors, policymakers,
and academics about the most pressing market-moving issues for our top-of-my-report from Goldman Sachs Research.
I recently spoke with Paul Krugman, Jan Hatsias, and Oren Kass.
about what the radical shift in tariff policy could mean for the U.S. economy.
I started off by asking Paul Krugman,
who won the Nobel Prize in Economic Sciences for his work on international trade and economic geography,
to give us some context on just how significant the Trump tariffs are.
There has been nothing like this.
The story keeps changing,
but it looks
like we're looking at an average tariff rate that is a little bit higher than the Smoot-Hawley tariff of 1930.
But Smoot-Hawley was starting off a base of quite high tariff rates.
So the actual increase in Smoot-Hawley was a few percentage points on the average tariff rate.
Here we're leaping from something like 3% average tariff to something like 20 or more average tariff,
which is vastly bigger than Smoot-Hawley.
And trade is about three times as big a share of the US economy as it was in 1930.