Analysis: Trump's drive against top universities could carry a big economic cost

CNN

13-04-2025

President Donald Trump's offensive against elite universities is also an assault on the nation's most economically dynamic metropolitan areas — and a threat to America's global competitiveness.
From Boston and Austin to Seattle and Silicon Valley, these elite research universities have served as the catalysts for growth in the nation's most productive regional economies. They have produced a steady stream of scientific breakthroughs and skilled young graduates who flow into companies pursuing cutting-edge technologies in computing, communications, artificial intelligence, medical equipment, biotechnology, pharmaceuticals and other advanced industries.
'This is the fundamental economic geography of the high-value, advanced industry system in America,' said Mark Muro, a senior fellow at the nonpartisan Brookings Metro think tank. 'This is American industrial policy at work.'
But now the Trump administration is threatening to stall this economic engine by terminating research grants for major universities, cutting overall federal support for scientific research, and deporting international students over their political activities.
'This is about the well-being of our constituents and it's also about the future of our communities,' Boston Mayor Michelle Wu said in an interview. The research grants the Trump administration is rescinding, she said, 'are not on or off switches that affect (only) the current moment or current generation; these are investments in our collective future.' For communities whose economies revolve around major research universities, she said, stopping Trump's moves against them represents 'survival stakes.'
Despite some improvement for Trump in the 2024 election, the regions surrounding these big universities voted preponderantly against him last year. So, in targeting elite research universities that conservatives deride as strongholds of 'the woke mind virus,' Trump may believe he is hurting only places already hostile to him. But because these universities are so integrated into their surrounding regions, Trump cannot hurt these campuses without also harming the metro areas leading the country's domestic economic growth.
And because those metro areas have become the nation's principal incubators of scientific and technological advances, harming them also harms the nation's international competitiveness, particularly as it faces a mounting challenge from China in critical emerging technologies, including artificial intelligence and electric vehicles. In the global competition for 21st-century economic supremacy, Trump's wide-ranging assault on America's top research institutions may come to be seen as a profound act of unilateral disarmament.
Collaboration among the government, academia and business to promote scientific and technological advances traces back to the earliest days of American history. But the partnership between the government and universities ascended to a new height during World War II. Under the leadership of Vannevar Bush, a legendary engineer and university administrator, Washington enlisted academic scientists into the war effort to an unprecedented extent (a process that included the Manhattan Project to develop the atomic bomb). A landmark report from Bush in 1945 inspired the creation of the National Science Foundation in 1950 to promote basic research in science and engineering. The National Institutes of Health has long provided parallel support for basic medical research.
Washington further expanded its role in nurturing basic research after the Soviet Union shocked the world by launching the Sputnik satellite in 1957. The big increase in federal support for education and scientific research after Sputnik was the moment when 'universities and government became joined in terms of the future of this society,' said Ira Harkavy, director of the Netter Center for Community Partnerships at the University of Pennsylvania. The fruits of that collaboration included the scientific advances that produced the semiconductor and the internet.
In recent decades, basic scientific research conducted at elite universities has become the cornerstone of America's most innovative industries, said Martin Kenney, a professor in the Community and Regional Development Program at the University of California at Davis. Since about 1980, he said, the US 'innovation system' has informally evolved into a three-step process in which new technologies start with basic research at academic institutions; are honed at startup companies funded through venture capital; and ultimately are commercialized at scale once those startups are bought by larger existing companies or taken to the stock market through initial public offerings.
'That was the way the United States decided to compete globally and (to develop) the highest-end technology,' Kenney said.
That genealogy is evident in many of the nation's most economically vibrant metropolitan areas. Many cities now benefit from large amounts of direct employment and local purchases from medical and academic institutions — what urban planners call 'meds and eds.'
But even greater may be the spinoff economic effects from big scientific and medical institutions. The regions that house the nation's most advanced companies in fields such as biotechnology, computing and artificial intelligence almost all orbit around world-class universities and medical centers, which have generated both scientific breakthroughs and a talent pipeline critical to those industries' growth.
Places that have benefited from this dynamic include Boston, Chicago, the San Francisco Bay Area, Houston, Los Angeles and the Research Triangle in North Carolina (with three universities each among the top 100 recipients in federal research grants); New York City (with four); and Austin, Seattle and Madison, Wisconsin, each of which is home to its state's flagship public university, also a top 100 grant recipient.
A Brookings Metro analysis provided exclusively to CNN found that of the 100 US counties that generate the most economic output, 44 are home to a university that ranks among the top 100 in receiving federal research grants. Forty-one of the 100 counties producing the most economic output also contain at least one or more of the 100 institutions graduating the most PhDs in science and engineering. (Several other top 100 output counties, like San Mateo outside San Francisco and Essex outside Boston, benefit from the economic activity spun off from nearby universities even though they don't house one themselves.)
These counties far outpunch their weight in generating economic activity. The 44 high-output counties that house at least one major research university represent less than 1.5% of the nation's roughly 3,100 counties. But they generate nearly 35% of the nation's total economic output, Brookings Metro found.
'People look at the US innovation system as something that is immutable and durable,' Muro said. 'But these are actually delicate ecosystems that have been built up over 50 years. This is one of the great achievements of post-World War II American economic development. And that could be gravely disrupted here.'
The explosive growth in Madison and its suburbs show how these pieces fit together. Many of the region's biggest employers trace their products back to research conducted at the University of Wisconsin at Madison (which ranks No. 15 as a recipient of federal research grants) and recruit university graduates as workers, said Zach Brandon, president of the Greater Madison Chamber of Commerce.
These include a concentration of companies developing advanced medical treatments and technologies, led by Epic, the huge software company that created the MyChart app and was founded by a University of Wisconsin graduate. The success of these companies, which has made Madison the state's fastest-growing area, demonstrates that 'when you really think about making what's next, inventing the future, that's happening because of research at our world class universities,' Brandon said.
On multiple fronts, the Trump administration is now threatening that pipeline from academia to business. It has canceled, suspended or announced reviews into billions of dollars in combined federal grants to seven institutions that rank among the 100 top recipients of government research funds: Columbia, Harvard, Princeton, Brown and the University of Pennsylvania, with Northwestern and Cornell added to the list last week. The administration has targeted these institutions primarily because of their response to campus protests against the war in Gaza, but also over their policies on racial diversity in admissions, cooperation with immigration enforcement and allowing transgender women to compete in sports.
Another 19 universities that rank among the top 100 federal grant recipients were among those notified in a March letter from the Education Department that they faced the possible funding losses over allegations of failing to protect students from antisemitism. Separately, Johns Hopkins University lost $800 million in grants and contracts from the administration's sweeping cuts at the US Agency for International Development, which forced it to dismiss some 2,000 employees.
Simultaneously, the administration has slowed the distribution of National Science Foundation grants: One recent analysis found the NSF approved about 50% fewer grants in the first two months of Trump's second term as it did in the equivalent period last year. Last week, the NSF announced it is funding fellowships for only half as many graduate students as it did last year.
The White House did not respond to a request for comment about the economic implications of its policies toward scientific research and major universities.
No Trump policy change has rattled academia more than the National Institutes of Health's February announcement that it is slashing the share of federal research dollars that universities can apply to ongoing overhead costs. Universities have relied on those so-called indirect expenses to build the infrastructure that underpins their scientific research, from constructing labs to hiring support staff.
The administration has defended the change as an effort to ensure that more federal dollars flow directly into research rather than ancillary activities. But scientists and university administrators have said the change would force massive cutbacks in research. Earlier this month, a district court judge in Maryland permanently blocked Trump from making the change, but the Republican-appointed Supreme Court majority has already overturned several similar lower court rulings.
Supporters of university research see another threat: the administration's repeated moves to deport foreign students, including several for political viewpoints they expressed about the Israel-Hamas war. 'If you are a smart kid in India or China, you are going to ask: 'Why am I going to go to the United States?'' Kenney said.
These pincer moves have divided academic administrators, with some schools conceding to the administration's demands (such as Columbia) and others pledging to fight them (Princeton). But the implications of these cutbacks will reverberate far beyond campus walls.
'It's not just the university presidents who are nervous; it's going to be the regional economic developers and the regional business leaders who will be extremely concerned about the interruptions that are coming,' Muro said.
Brandon, of Madison, is one of those concerned business leaders. He's working to revive an organization of local chambers of commerce to lobby Washington to support federal funding for scientific research. 'The basic research of today is the applied research of tomorrow and is the innovation of the future,' he said. 'If we turn off that tap, sure you could go four years, you can maybe go eight years, but eventually the innovation drought comes.'
Wu, the Boston mayor, similarly organized a bipartisan group of 45 local officials to join the lawsuit to block the administration's cuts in indirect costs for NIH grant recipients. Trump's offensive against research universities, she said, 'is different from what has ever happened before, where individual communities and industries are being targeted and punished.'
Trump gained ground in 2024 in the nation's most economically productive places, but they still voted heavily against him. According to Brookings Metro, former Vice President Kamala Harris won 40 of the 44 high-output counties that also house at least one top research university. Those 40 counties alone accounted for nearly 40% of Harris' votes nationwide; the four top counties Trump won in that group, by contrast, accounted for only 5% of his votes.
Even the domestic political consequences of Trump's moves against major universities, though, may pale beside the international implications. Some scientific and business leaders have described China's striking recent advances in AI technology as a modern equivalent to the Sputnik shock that galvanized the nation in the late 1950s.
Yet Trump is responding in exactly the opposite way as the nation did then, when it surged federal support for research and education. 'If we are going to have a 'Sputnik moment' on AI and (related) technologies,' Muro said, 'this does not seem like a winning response.' Trump's escalating war against top-tier American universities and the big blue metros that orbit them might channel his base's antagonism toward 'coastal elites,' but the ultimate winner in this confrontation may be China.