Exclusive | Nobel Laureate Warns of Potential Economic Recession From Trump's Tariffs

Eric Maskin, the 2007 Nobel laureate in economics, believes that U.S. President Trump's first year in office has disrupted the global trade order.

In an exclusive interview with Storm Media, Maskin claimed that Trump's tariff policies have harmed both the U.S. and the world, along with discussing his entry into economics and intellectual influences. 

Articulate and engaging,the 75-year-old Harvard professor granted the interview following a lecture on why globalization has failed to reduce inequality at National Taiwan University on December 15. 

From math to economics

Born in New York, Maskin first fell in love with math during high school, seeing it as creative and beautiful. He first majored in pure mathematics at university, but later switched focus to economics after fate placed him alongside Kenneth Arrow, a fellow Nobel laureate in economics who served as Maskin's doctoral advisor at Harvard. ​

"It was really because of Arrow that I discovered what economics could do, what it was capable of doing... I ended up doing my PHD with Arrow, and that changed my life."​ （Related： Taiwan’s 2026 Labor Overhaul: Higher Pay, Better Leave, Later Retirement ｜ Latest ）

Inspired by Einstein

During his later tenure at Princeton, Maskin had the opportunity to reside for ten years in the home of Albert Einstein, one of his intellectual inspirations.

"Even before I lived in the house, I was inspired by Einstein, because he showed how pure thought could be a powerful tool for understanding the world. One of Einstein's great discoveries was that gravity, such as the Earth's gravity, can bend light. This was something that was not known before Einstein. But Einstein didn't figure this out by doing experiments; it was just thinking that led him to that discovery. And I found that inspirational, that pure thought could lead to such deep insight." 

This ideal of pure thought guided Maskin and led him to develop mechanism design, a theory that tries to mitigate inequality between nations and narrow the global income gap, for which he was awarded the Nobel prize in economics. 

Mechanism Design

Maskin analyzed that many disadvantaged individuals in developing countries lack the skills needed in a globalized market, left behind in the process of modernization. If given opportunities for education or training, their integration into the global economy would raise their incomes. Policies expanding educational and training opportunities could diminish income inequality. （Related： Taiwan’s 2026 Labor Overhaul: Higher Pay, Better Leave, Later Retirement ｜ Latest ）

​The key issue, Maskin pointed out, is that education and training represent costly investments.​

"The poor lack funds to invest in education and training; private enterprises are insufficiently incentivized, as trained employees may leave for competitors. This is where mechanism design can play a role."

"Governments can provide subsidies to encourage corporate training programs," Maskin suggested. "Policy measures elevating the education and training of the underprivileged would enhance their skills and incomes, thereby reducing disparities."

In the AI era, he remarked, "Incentives through government subsidies to enhance education and training among the disadvantaged are even more crucial."

Tariffs cause long-term harm

Before last year's U.S. presidential election, several Nobel laureate economists, includingMaskin, co-signed an open letter warning that a second Trump presidency damage both the U.S. and global economy.

One year later, he remains deeply concerned about Trump's policies, none more so than tariffs. 

"Inflation continues to be a problem, but worse than that, by imposing these crazy tariffs, Trump has endangered the U.S. economy, as well as many other economies."  （Related： Taiwan’s 2026 Labor Overhaul: Higher Pay, Better Leave, Later Retirement ｜ Latest ）

Explaining that they reduce trade to the detriment of all parties involved, Maskin pointed to high tariff policies as a key reason for the Great Depression - the most severe economic downturnin U.S. history. 

"After that depression, we learned the lesson that in a recession, you should not impose tariffs."

However, despite his warnings, Maskin noted that much of the public still seems unaware of the potential harm from Trump's policy mistakes and that it might take a recession to remind them. 

In addition toabolishing tariffs, Maskin proposed assisting individuals who have lost jobs due to globalization or automation policies as a key means to narrow thepersistent income gap in the U.S.

Cryptocurrency could undermine monetary policy

Maskin also has strong reservations about Trump's promotion of cryptocurrency.​

"Privately created cryptocurrency brings no benefits to the economy, but it causes many harms."

Private cryptocurrencies allow criminals to act more covertly and are unstable investments with unreliable returns, Maskin warns. 

While in favor of government-issued cryptocurrency, Maskin emphasized that widespread use of private cryptocurrencyinstead of ordinary money would diminish central banks' control over monetary policy.   （Related： Taiwan’s 2026 Labor Overhaul: Higher Pay, Better Leave, Later Retirement ｜ Latest ）

"Central banks of the world lose their power to fight recessions and fight inflation."