Trump's Crackdown on Harvard's Foreign Students Sparks Sector-Wide Alarm

Political

Summary:

The Trump administration's decision to halt Harvard University’s enrollment of international students has sent shockwaves through U.S. higher education...

A Targeted Blow with Broader Implications

President Donald Trump's administration escalated its campaign against Harvard University on Thursday by suspending the school's ability to enroll new international students. The move, framed as a disciplinary measure for Harvard’s alleged failure to address antisemitism and harassment on campus, cuts deep into the university’s financial and academic lifeblood—and signals a potential shift in federal policy toward higher education more broadly.

Kristi Noem, the administration’s Homeland Security adviser, confirmed in a Fox News appearance that other universities, including Columbia, are also under review: “This should be a warning to every other university to get your act together.”

The Financial Domino Effect

International students, who comprised 27% of Harvard’s total student body in 2025 (6,800 out of approximately 25,000), are typically full-tuition payers. This demographic plays a key role in cross-subsidizing domestic students who rely on scholarships or need-based aid. The impact extends far beyond Harvard.

According to federal data, at least 43 U.S. colleges have even higher proportions of international students. Columbia University, now facing similar scrutiny, had a 39% international student share in 2023. At 246 other U.S. institutions with over 1,000 students, at least 10% are from abroad.

Chuck Ambrose, former president of the University of Central Missouri, noted that “foreign tuition often props up the entire business model of U.S. higher ed,” especially in public and mid-tier private institutions.

A Sector Already Under Fiscal Strain

Harvard has already lost nearly $3 billion in federal research contracts and grants in recent weeks, compounding the financial damage. These freezes stem from investigations tied to campus unrest and alleged noncompliance with federal guidelines. As Professor Robert Kelchen of the University of Tennessee put it: “It’s just another financial hit on top of several hits that have already come for big research universities.”

Trump’s approach not only undermines elite institutions’ reputations but also hampers their capacity to maintain global competitiveness in science, medicine, and technology—areas traditionally buoyed by foreign graduate students and research scholars.

As of now, student financial aid remains untouched, but insiders say it may not be off the table should the administration pursue deeper structural reforms.

Higher Ed Enters the Political Crosshairs

Critics view this as a politically motivated assault on liberal bastions of academia, rather than a good-faith effort to combat campus misconduct. In restricting international enrollment and research funds, the administration risks eroding the global prestige and operational capacity of institutions that attract some of the brightest minds worldwide.

While the Department of Homeland Security has not published a formal list of targeted schools, industry experts suggest that institutions with large international populations and visible campus protests are most vulnerable. These include Columbia, Stanford, NYU, and UC Berkeley.

A Chilling Message to Universities

The Trump administration’s suspension of Harvard’s foreign student enrollments is not an isolated action—it’s a strategic pivot that ties immigration, education, and political ideology into one combustible package. If replicated, the measure could undermine the financial resilience and global standing of the entire U.S. higher education system.

In a sector already rattled by reduced federal support and heightened scrutiny over campus politics, the loss of international students may prove to be the most disruptive force yet. For now, the message is clear: no university is untouchable.

Source: Reuters

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Daily News

[Quick Facts]

1. Trump amasses $600 million war chest, vowing to secure both Houses in midterms.

2. U.S. not yet convinced to accept G7 proposal to lower Russian oil price cap

3. UK consumers turn a little less gloomy in May

4. Tariff uncertainty fuels U.S. lumber price swings, raising housing costs.

5. Japan's key inflation gauge hits fastest pace in two years.

6. U.S. mortgage rates approach 7%.

7. U.S. House passes Massive Tax Cut Bill, fueling debt concerns.

8. G7 draft communiqué pledges tackling "Excessive Imbalances" in global economy.

9. U.S. Existing-Home sales drop, marking worst April since 2009.

[News Details]

Trump amasses $600 million war chest, vowing to secure both Houses in midterms

According to reports, three informed sources revealed that U.S. President Trump has raised at least 600 million U.S. dollars in political donations for the midterm elections. Insiders disclosed that Trump’s ultimate goal is to a mass 1 billion or more and gain control of both the Senate and the House of Representatives by November next year. Trump is eager to reverse the trend of Republican candidates frequently being outpaced by Democrats and aims to maximize his presidential influence. Any remaining funds after his term could help him maintain significant sway over the Republican Party, solidifying his position as the most influential decision-maker and potential benefactor in 2028 and beyond.

U.S. not yet convinced to accept G7 proposal to lower Russian oil price cap

A European official stated on Thursday that the U.S. has "not yet been convinced" to accept the G7’s proposal to lower the price cap on Russian crude oil. The EU has proposed reducing the cap to a reference level of 50 U.S. dollars/barrel. The price cap, initially established in 2022, aiming to curb Russia's oil revenue by prohibiting transactions involving Russian crude sold above 60 U.S. dollars/barrel from using Western-provided insurance services. Ukraine has been pushing aggressively for the cap to be lowered to 30 U.S. dollars/barrel. The unnamed European official noted that the U.S. Treasury delegation at the meeting argued that oil prices are already declining and harming Russia’s interests. However, the official added that the U.S. remains open to further discussions on the matter.

UK consumers turn a little less gloomy in May

A survey released on Friday showed a modest improvement in UK consumer confidence in May, likely reflecting lower interest rates and easing global trade tensions. Market research firm GfK's consumer confidence index rose to -20 in May from -23 in April, led by more optimism among households over the outlook for their finances and the wider economy. Neil Bellamy, Client Strategy Director at GfK, suggested that the Bank of England's rate cut on May 8th and a partial de-escalation of the U.S.-led trade war under President Trump may have provided some relief. "Those dangers - especially the issue of inflation – have not disappeared but the consumer mood in the UK does appear to have improved a little," Bellamy said. Nonetheless, the reading remained somewhat below the survey's long-run average of -11.

Tariff uncertainty fuels U.S. lumber price swings, raising housing costs

Despite being spared from the U.S. government's proposed retaliatory tariffs in April, the American lumber industry remains uneasy. On one hand, extreme price volatility has heightened uncertainty; on the other, plans to more than double existing countervailing and anti-dumping duties on Canadian lumber have deepened concerns. By April 2025, softwood lumber prices had surged 23% year-on-year. Fears of higher tariffs, coupled with sawmill closures across North America, also drove a sharp rise in lumber futures in Q1 2025.

Japan's key inflation gauge hits fastest pace in two years

Japan's key inflation indicator accelerated at its fastest rate in two years, driven by rising food and energy costs, adding to policymakers' challenges amid growing economic uncertainty. Data released Friday showed consumer prices excluding fresh food rose 3.5% year-on-year in April, up from 3.2% in March and slightly above economists' 3.4% forecast. Another measure excluding energy costs climbed 3.0%, hitting that level for the first time in over a year. Energy prices jumped 9.3% as the government phased out gas and electricity subsidies in March. The ruling party is now considering reinstating subsidies as early as June and taking steps to lower gasoline prices.

U.S. mortgage rates approach 7%

U.S. mortgage rates have climbed to their highest level in three months. According to a Freddie Mac survey of lenders, the average rate for a standard 30-year fixed mortgage rose to 6.86%, up from 6.81% a week earlier. Turbulence in the bond market has pushed yields higher as investors fret over inflation, government budget deficits, and Moody's recent downgrade of the U.S. credit rating. Mortgage rates typically track the yield on the 10-year Treasury note. Bob Broeksmit, CEO of the Mortgage Bankers Association, said the group expects rates to "remain volatile" in the coming months but stay within a range of 6.6% to 7%. Rising rates, elevated home prices, and economic uncertainty continue to weigh on housing market activity during the critical spring selling season. Existing-home sales declined for the second straight month in April.

U.S. House passes Massive Tax Cut Bill, fueling debt concerns

The Republican-controlled U.S. House of Representatives narrowly passed a sweeping tax and spending bill on May 22nd, despite warnings from the Committee for a Responsible Federal Budget (CRFB) that it would dramatically increase federal debt. The bill cleared the House by a 215-214 vote, with all Democrats and two Republicans opposing it and one Republican abstaining.

The legislation extends corporate and individual tax cuts originally enacted under President Trump's 2017 tax law during his first presidency, introduces new tax breaks for tips and auto loans, boosts defense spending, and allocates additional funds to curb illegal immigration. It also repeals several green energy incentives championed by Democratic former President Biden while tightening eligibility requirements for Medicaid and food assistance programs to cut federal spending.

The CRFB has raised serious concerns about the bill, previously calling the House's budget framework " is nothing short of a fiscal failure." The group estimates the legislation would add over $3 trillion to the national debt and create a "fiscal cliff" when temporary tax cuts and spending policies expire—potentially costing trillions more if extended.

G7 draft communiqué pledges tackling "Excessive Imbalances" in global economy

A draft communiqué cited by sources on Thursday revealed that finance ministers and central bank governors from the Group of Seven democracies papered over their differences on Thursday, pledging to address "excessive imbalances" in the global economy. The finance ministers and central bank governors, who met in the Canadian Rocky Mountains, said there was a need for a common understanding of how "non-market policies and practices" undermine international economic security. The report also indicated that the G7 communique called for an analysis of market concentration and international supply chain resilience. "We agree on the importance of a level playing field and taking a broadly coordinated approach to address the harm caused by those who do not abide by the same rules and lack transparency," it said. The G7 finance chiefs condemned what they called Russia's "continued brutal war" against Ukraine and said that if efforts to achieve a ceasefire failed, they would explore all possible options, including "further ramping up sanctions."

U.S. Existing-Home sales drop, marking worst April since 2009

Hampered by persistent affordability constraints, U.S. existing-home sales unexpectedly fell to a seven-month low in April, signaling a sluggish start to the critical spring housing season. Data released Thursday by the National Association of Realtors (NAR) showed sales declined 0.5% to an annualized rate of 4 million units, below the median forecast in a Bloomberg survey and the weakest April performance since 2009.

[Today's Focus]

UTC+8 14:00 UK April Retail Sales MoM

UTC+8 20:30 Canada March Retail Sales MoM

UTC+8 22:00 US April New Home Sales (Annualized)

UTC+8 22:30 Speech by Bank of England Chief Economist Pill

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Gerik

Economic

A Knife-Edge Victory with Far-Reaching Impact

In a dramatic 215–214 vote, the U.S. House of Representatives passed what President Trump has branded the most “significant piece of legislation” in American history. The bill delivers a sweeping extension of his 2017 tax cuts, enacts new tax breaks for tips and auto loans, and boosts funding for military expansion and a large-scale immigration crackdown. Yet, this legislative triumph may come at an enormous cost: an estimated $3.8 trillion increase to the national debt over the next decade, according to the nonpartisan Congressional Budget Office (CBO).

The vote showcased the razor-thin margins and political tensions engulfing the Republican-controlled House. Two Republicans voted against it, one voted present, and another missed the vote entirely—reportedly because he fell asleep.

Debt Concerns Trigger Investor Backlash

Wall Street has responded with unease. Yields on 30-year Treasury bonds surged to their highest levels since October 2023, reflecting investors’ rising risk premiums for long-term U.S. debt. The dollar has slumped more than 10% since January, and U.S. equities tumbled as fiscal outlook warnings mounted. Solar and green energy stocks fell sharply, reflecting provisions in the bill that target climate-related tax incentives enacted under the Biden administration.

Credit rating agency Moody’s recently downgraded the U.S. sovereign rating, citing unsustainable debt dynamics—a warning echoed by many lawmakers. “We’re putting coal in the boiler and setting a course for the iceberg,” said Republican Representative Thomas Massie, one of two GOP dissenters.

Policy Details: Redistribution and Controversy

The 1,100-page bill includes:

- Extension of 2017 tax cuts for individuals and corporations

- New tax breaks for tipped workers and auto loans

- Cancellation of green-energy subsidies

- Tightened eligibility for food and health programs

- Massive funding for immigration enforcement, with capacity for 1 million deportations annually

Relaxation of firearm silencer regulations

Despite its populist framing, the bill has drawn criticism for favoring the wealthy. According to the CBO, it would reduce income for the bottom 10% of households while boosting it for the top 10%. Democrats have called it a "scam" that undermines working Americans while rewarding Trump's affluent allies.

A newly inserted provision rebrands tax-free savings accounts for children as “Trump Accounts”—a symbolic gesture underscoring the bill’s overt alignment with the former president’s personal brand.

Balancing Ideology and Political Survival

House Speaker Mike Johnson made eleventh-hour concessions to satisfy both the conservative and centrist factions of his party. These included advancing work requirements for Medicaid recipients (effective end-2026), expanding state tax deductions (benefiting high-income earners in blue states), and penalizing future Medicaid expansions. These measures helped secure votes, but also shifted more of the social burden onto vulnerable populations.

Importantly, the bill also includes a provision to raise the U.S. debt ceiling by $4 trillion, designed to avoid a summer default. Ironically, this move to accommodate massive fiscal expansion has intensified the very investor anxieties Republicans have long decried.

A Tumultuous Senate Battle

The legislation now heads to the Republican-led Senate, where it is expected to face weeks of amendment battles and further scrutiny. Although passage remains likely, the bill may undergo significant revisions before reaching Trump’s desk.

In a world of rising borrowing costs, strained geopolitical ties, and an uncertain election season ahead, the bill’s passage represents not just a political gamble but a seismic economic shift. As the U.S. sails into deeper debt, lawmakers, investors, and households alike must brace for the long-term consequences.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Gerik

Economic

Jobless Claims Hold Steady Amid Broader Uncertainty

The U.S. labor market remains robust despite growing macroeconomic headwinds. According to the Labor Department’s latest report, initial claims for unemployment benefits decreased by 2,000 to a seasonally adjusted 227,000 in the week ending May 17—slightly below economists’ expectations. This indicates that employers are largely avoiding layoffs, even as business conditions remain volatile.

The figure is within the year's typical range (205,000–243,000), and analysts note that no significant labor market deterioration is evident yet. "There is no serious deterioration in the labor market to date," said Christopher Rupkey of FWDBONDS. "The economy is weathering the storm for now."

Continuing Claims Edge Higher, Suggesting Friction in Hiring

Despite the headline stability, some cracks are appearing. Continuing claims rose by 36,000 to 1.903 million, the highest since late 2021. This increase suggests a growing number of workers are remaining unemployed for longer periods, highlighting potential challenges in job matching or weak labor demand in specific sectors.

The median duration of unemployment increased from 9.8 weeks in March to 10.4 weeks in April, reinforcing concerns that it’s becoming more difficult for displaced workers to find new positions.

Federal Workforce Under Pressure

An important development is the surge in unemployment applications under the Unemployment Compensation for Federal Employees (UCFE) program. This coincides with the Trump administration’s aggressive government downsizing agenda, led by Elon Musk's Department of Government Efficiency (DOGE), which has ramped up layoffs across federal agencies.

These layoffs, while not yet large enough to disrupt national labor data, are contributing to localized job losses and could impact regional consumption patterns and tax revenues.

Tariffs and Hiring Freeze Concerns Loom

While job creation remained strong in April with 177,000 new positions, economists are bracing for a slowdown in the second half of 2025. Trump’s shifting tariff policies, which have disrupted trade flows and increased input costs, are expected to reduce business confidence and hiring appetite.

If import duties continue to depress corporate investment and squeeze margins, analysts forecast job growth could fall below 100,000 per month—barely enough to match population growth.

Slower Growth, but No Sign of Collapse Yet

Despite fears of policy-induced economic drag, labor market indicators are not flashing red. As Carl Weinberg of High Frequency Economics notes, “If the labor market were really softening in an incipient recession, you would not have to squint at the chart to see it.”

Nevertheless, the rising duration of unemployment and continued layoffs in the public sector are warning signs. Next week’s data on continued claims and nonfarm payrolls will offer further clarity on whether the job market’s current resilience can withstand the pressures ahead.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Olivia Brooks

Political

Finance ministers and central bank governors from the Group of Seven democracies pledged on Thursday to address "excessive imbalances" in the global economy and said they could increase sanctions on Russia.

The finance ministers and central bank governors, who met in the Canadian Rocky Mountains, said there was a need for a common understanding of how "non-market policies and practices" undermine international economic security.

The final communique called for an analysis of market concentration and international supply chain resilience.

"We agree on the importance of a level playing field and taking a broadly coordinated approach to address the harm caused by those who do not abide by the same rules and lack transparency," it said.

European Commission Executive Vice President Valdis Dombrovskis said the G7 ministers discussed proposals for further sanctions on Russia to try to end its war in Ukraine. They included lowering the G7-led $60-per-barrel price cap on Russian oil, given that Russian crude is now selling under that level, he said.

The G7 participants condemned what they called Russia's "continued brutal war" against Ukraine and said that if efforts to achieve a ceasefire failed, they would explore all possible options, including "further ramping up sanctions."

Russia's sovereign assets in G7 jurisdictions would remain immobilized until Moscow ended the war and paid for the damage it has caused to Ukraine, the communique said. It did not mention a price cap.

Brent crude currently trades around $64 per barrel.

A European official said the United States is "not convinced" about lowering the Russian oil price cap. A U.S. Treasury official did not immediately respond to a request for comment.

Treasury said earlier this week that Secretary Scott Bessent intended to press G7 allies to focus on rebalancing the global economy to protect workers and companies.

The communique also recognized an increase in low-value international "de minimis" package shipments that can overwhelm customs and tax collection systems and be used for smuggling drugs and other illicit goods.

The duty-free de minimis exemption for packages valued below $800 has been exploited by Chinese e-commerce companies including Shein and Temu (PDD.O), opens new tab.

Source: Reuters

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Balogun Opeyemi

Japan's core inflation accelerated to 3.5% in April, government data showed on Friday, as persistent cost pressure strengthens the case for the central bank to focus on exiting its decade-long ultra-easy policy.

The core inflation figure, which strips out prices for fresh food, was higher than expectations of 3.4%, according to economists polled by Reuters, marking the highest level since January 2023, according to LSEG data.

Headline inflation climbed 3.6% from a year ago, staying above the Bank of Japan's 2% target for more than three years, steady from the prior month.

Bank of Japan Governor Kazuo Ueda has signaled the central bank's readiness to keep raising rates, albeit at a slower pace, while the authorities pause to assess the impacts from U.S. tariffs.

This is breaking news. Please refresh for updates.

Source: CNBC

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Liam Peterson

Business activity in Europe declined in May even as President Trump rolled back some tariff hikes while leaving a wide range of duties to be determined by negotiation, according to surveys released Thursday.

Businesses and investors were shocked by the scale and breadth of the tariff rises announced by Trump on April 2, leading to sharp declines in prices on financial markets, while businesses around the world trimmed overseas orders and cut back on production, pushing measures of activity to a 17-month low.

However, the Trump administration later suspended many of those increases for 90 days, and reached an agreement with China on May 12 to roll back a series of huge tariff hikes. The administration is conducting negotiations with a number of economies, but has also said it might set some duties unilaterally when the 90-day pause ends.

Surveys conducted by data firm S&P Global during the early weeks of this month suggest businesses have responded cautiously to those moves, which leave the outlook for world trade highly uncertain.

However, the weakness in Europe was driven by its more domestic-focused services sector, with manufacturing output continuing to increase.

"While foreign demand for services is softening, it is the sluggish domestic demand that seems to be dragging the sector down," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which commissions the surveys for the eurozone.

Based on the surveys, the composite Purchasing Managers Index for the eurozone-a measure of activity in the services and manufacturing sectors-fell to 49.5 in May from 50.4 in April, a six-month low.

A reading above 50.0 points to an increase in activity, while below that level a decline is indicated. Economists surveyed by The Wall Street Journal last week had expected to see a rise to 50.8 on indications that U.S. tariffs would settle at a lower level than initially feared.

Business activity also declined in Japan, again due largely to a slowdown in the services sector. By contrast, Australian business activity continued to increase, although at a slower pace, while manufacturers reported a first rise in new export orders for three months.

India's economy has been one of the world's strongest performers over recent years, and the surveys showed that activity rebounded sharply in May to record the fastest increase in over a year, as did export orders.

The eurozone economy grew at a faster pace in the first three months of the year than it did at the end of 2024, due largely to a surge in Irish exports of pharmaceuticals to the U.S. ahead of anticipated tariff hikes.

Those have yet to materialize, although the Trump administration is conducting a review of the sector under a process that would allow it to impose tariffs for reasons of national security.

For now, European exporters face an additional 10% tariff on their sales to American businesses, unless they make automobiles, steel or aluminum, in which case the duty is 25%.

The European Union's economists Monday said they expect exports to grow much more weakly than anticipated before the tariffs were announced, and now see the eurozone economy growing by 0.9% this year, having expected to see an expansion of 1.3% when they last produced forecasts in November. The surveys released Thursday suggest a slowdown has begun.

Even before the tariffs were announced, businesses acting in anticipation of their implementation led to big swings in economic activity around the world.

Most significantly, U.S. businesses tried to delay a jump in costs by stockpiling ahead of the April 2 announcement. That contributed to a contraction in the U.S. economy during the first quarter, a fate shared by Japan. By contrast, a rise in exports to the U.S. helped China's economy to record a strong expansion, while the U.K. saw a jump in activity on higher sales of aluminum to American buyers.

Over coming quarters, economic growth around the world is likely to depend in part on whether U.S. businesses decide to add to their stockpiles under the assumption that tariffs and therefore their costs will be higher later in the year, or run down those inventories, which can be costly to maintain for long.

Write to Paul Hannon at paul.hannon@wsj.com