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 Allison 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 Hotsias, and Orrin 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 smooth holy.

And trade is about three times as big a share of the US economy as it was in 1930.

So this is quite literally, people have asked me when I say this, whether it's a figure of speech,

but this is an order of magnitude, bigger shock than anything that has ever happened in U.S.

history.

As far as I can tell anybody's history, even when you look at developing countries that have

very high tariffs for around 30 years after World War II, but they didn't get their all-in-one

jump.

So this is the biggest trade shock

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