Boston, MA — Massachusetts could lose billions of dollars each year due to policies enacted during the Trump administration, including tariffs, cuts to federal research funding, and restrictions on immigration, according to a new report from the Boston University Questrom School of Business.
The study, led by BU master lecturer Mark Williams, found that these policies threaten key sectors of the state’s economy, including international trade, higher education, and the life sciences industry. The report warns that continued implementation or extension of these policies could shrink the labor force, depress tax revenue, and trigger broader economic risks.
“The Trump administration’s tariff war has triggered a market downturn, increasing the likelihood of a national, or even global, recession, which could reduce Massachusetts’ annual income tax revenue by billions of dollars,” said Williams.
Trade Impact
Massachusetts’ economy is especially exposed to international trade, with Canada, China, and Mexico ranking among its top trading partners. The study estimates that tariffs on imported goods—ranging from electricity to raw materials like wood—could result in $12.8 billion in lost economic growth by 2026, nearly $1 billion in lost tax revenue, and as many as 79,000 job losses. In the event of a recession, those figures could double.
Research Funding at Risk
Cuts to National Institutes of Health (NIH) funding also pose a serious threat to Massachusetts’ thriving life sciences sector. Home to world-class universities and research hospitals, the state relies heavily on NIH grants to support its medical innovation ecosystem. By 2026, reduced funding could lead to $2.2 billion in lost economic activity and eliminate 14,000 jobs. Long-term cuts could erode the state’s global leadership in biomedical research, with total losses exceeding $12 billion.
Health and Education Vulnerabilities
Other programs like MassHealth could see increased costs of up to $1.3 billion annually due to potential reductions in federal reimbursement rates. Higher education is also at risk, particularly from immigration policies that target international students. The report notes that Massachusetts hosts around 82,000 international students who contribute $3.9 billion to the state economy. Stricter visa rules and student deportations could reduce enrollment by at least 10%, straining university budgets.
Immigration and Tourism Declines
Massachusetts has the fifth-highest percentage of foreign-born residents in the U.S., and immigrants play a critical role in population growth, entrepreneurship, and labor supply. The study warns that anti-immigration policies could diminish the state’s tax base and consumer spending. Travel bans and visa restrictions may also lead to a 30% drop in foreign tourism by 2028, reducing economic activity by $1.1 billion and cutting visitor numbers by over 600,000.
Williams cautioned that Massachusetts has not yet fully prepared for the long-term effects of these policies. “If the 2008 recession is any indicator,” he said, “the state may face tough choices, including budget cuts, public sector layoffs, and dipping into its rainy-day fund.”
The full report, The Economic Impact of Trump Policies on Massachusetts, is available through Boston University’s Questrom School of Business.
