How Trump's Feud With Harvard Could Imperil Massachusetts’ Economy

Massachusetts is bracing for a yearslong economic fallout from President Donald Trump’s escalating feud with its colleges even if a detente is eventually hammered out.

The Trump administration has frozen nearly $3 billion in federal grants and contracts with Harvard University and said the school is no longer eligible to receive new grants. Trump is also going after the institution’s eligibility to enroll international students, who contributed $383.6 million to the state’s economy last academic year.

Massachusetts Institute of Technology is facing a loss of more than $100 million in federal funding, and the University of Massachusetts Amherst, which receives more than $500 million in federal research funding annually, has seen a significant slow down in grants from federal agencies since January.

The institutions are just a few of the dozens of colleges and universities that have helped establish Massachusetts as a leader in scientific research, biotechnology and health care. They also power a significant portion of the state’s labor market with University of Massachusetts, MIT and Harvard among the top employers.

The state and its universities are fighting to recoup their funding in court, and Trump has indicated that he may soon reach a deal with Harvard. But local officials are preparing for a new Massachusetts that has billions less in its coffers and a shrunken higher education sector that can’t depend on the federal government for financial support.

“No state has the resources to make up the cuts that President Trump is making,” Massachusetts Gov. Maura Healey said. The democratic leader said the contributions of the state's colleges and universities penetrate the country.

“These universities, these students, these faculty members, these scientists are responsible for developing so many new cures, new treatments, inventing technologies so important to our defense and national security, and also are responsible for incubating and starting companies that have generated a huge amount for not just a Massachusetts economy, but for the American economy.”

Massachusetts launched a database for tracking the impact of federal funding cuts that estimates a loss of $366 million to the state. But in Cambridge, local officials say they are unable to put a number on what the fallout could look like — especially since Harvard and MIT are deeply intertwined with the city’s identity and economy. They are the largest employers in Cambridge, said Paul Toner, a Cambridge City Council member who sits on the Economic Development and University Relations committee.

Cambridge had already been seeing an increase in office vacancies and a slowing of the lab development market, Toner said, which is having an impact on the property values and assessments of the business commercial districts.

“The Trump administration pulling funding for research. That is something that we're all very concerned about, because that's the lifeblood of the area,” he said, adding that the academic research often spins off into commercial research that is conducted in the city.

“It has a major ripple effect on our local economy and tax base if they're losing funding and students coming to Cambridge,” Toner said.

The White House did not respond to a request for comment.

Boston is similarly primed to face economic drawbacks from the Trump administration’s feud with Harvard. One economic impact analysis, first reported by Axios Boston, found that the billions in federal research cuts could lead to a $2.9 billion hit to the Boston metro area's GDP and affect 15,500 jobs. And it would take a year before the full economic impact is felt.

Boston Mayor Michelle Wu did not respond to a request for an interview by deadline.

Harvard is in an escalating battle with the Trump administration over its response to pro-Palestinian protests and antisemitism on campus. The administration contends that the university failed to protect Jewish students from harassment. But Harvard argues the demands outlined by the administration to recoup its frozen funding don’t address antisemitism and instead aim to control the institution’s governance, curriculum and the ideology of its faculty and students.

The university is suing the administration over the funding and the Trump administration’s efforts to restrict foreign students from enrolling.

MIT, along with other universities, is suing the Trump administration over Energy Department and National Institutes of Health decisions to cap the reimbursement rate for indirect costs at 15 percent. The school could lose up to $35 million in federal cash just from the NIH decision alone. Additionally, at least nine members of the campus community have had their visas and immigration status revoked since April.

“There could be more damage to MIT and to universities all across America, and to the entire American research ecosystem,” MIT President Sally Kornbluth warned in a letter last month, pointing to other policy decisions being made in Washington, including a proposal for an expanded tax on private college and university endowments.

Massachusetts has filed briefs in support of Harvard’s battle against the Trump administration and is also suing the administration to block cuts to National Science Foundation programs and funding. The lawsuit says the state, along with others, are seeking to protect themselves from “actions that will devastate critical STEM research at higher education institutions.”

Some Massachusetts cities have created programs to help residents negatively impacted by the administration’s feuds. Cambridge launched a $5 million stabilization fund to respond to potential Trump administration funding cuts to its housing programs.

Despite the court battles, Cambridge City Council member Burhan Azeem was skeptical of whether the funding would ever be reinstated. He said he believes it's unlikely and “so much of the damage to international students has already been done — people are afraid.”

“All of our industries are being super targeted in a very localized way which is kind of a surreal experience,” Azeem said, adding that “we're taking the brunt of the attacks in a way that no other university, no other city is, and other people are not standing up as proudly or as bravely as Harvard has.”