Trump’s Manufacturing Campaign Pledge Caught in Crosshairs of Grant Pause

President Donald Trump’s federal grant freeze created uncertainty for manufacturers on Tuesday as the Trump administraton paused funds that supported U.S. manufacturing.

Newsweek reached out to the White House for comment via email.

Why It Matters

Trump announced a pause on nearly all federal grants, potentially impacting billions of federal dollars designated for state and local governments. Federal funding supports thousands of initiatives, including research projects, housing assistance, and education grants.

“This temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities,” Matthew J. Vaeth, the Office of Management and Budget acting director, wrote in the memo announcing the pause.

Experts say the pause could have significant economic impacts.

What to Know

The Manufacturing Extension Partnership (MEP) is one of the many grants that could be affected by the freeze.

The announcement sparked widespread confusion about what grants will be affected, how recipients could continue operations and how long the pause would last. There is an exception funding and grants paid directly to American citizens, Medicare and Social Security will not be impacted.

MEP, a grand operated by the National Institute of Standards and Technology (NIST), is a program that is designed to “strengthen and empower U.S. manufacturers.”

According to NIST, the MEP program, bolstered in part by these grants, has created more than 107,000 jobs and catalyzed nearly $5 billion in new investment in U.S. manufacturing.

Recipients of the grant are “navigating a period of significant uncertainty” following Trump’s announcement, Peter Connolly, the CEO of the New Jersey Manufacturing Extension Program (NJMEP), told Newsweek on Tuesday.

“While federal funding is just one component of how we sustain and grow our operations, this decision introduces added challenges as we continue to serve New Jersey’s manufacturing community,” he said.

The pause isn’t a permanent end to financial grants to manufacturers. Vaeth wrote that financial asisstance should be “dedicated to advancing Administration priorities,” which would include “unleashing American energy and manufacturing.”

Vaeth wrote the pause is needed to allow the federal government to ensure assistance programs comply with Trump’s executive orders targeting Diversity, Equity and Inclusion (DEI) programs. Proponents of the freeze say it will save U.S. taxpayers money in the long term by cutting unnecessary spending.

According to data from the government, NJMEP has received $16 million in MEP grant obligations over the past year. States like California, Texas and Ohio are among other top recipients.

These grants play a “key role” in reducing overhead costs, allowing NJMEP to bolster manufacturers in New Jersey’s “highly competitive business environment,” Connolly said.

He said the pause has “far-reaching implications beyond manufacturing” that will affect business and daily life.

“We remain optimistic for a swift and thoughtful resolution, confident that programs like ours align with and advance the administration’s goals to strengthen American manufacturing and drive innovation,” he said.

Other recipients reached by Newsweek declined to comment, with one recipient noting they have little information about the effects of the freeze.

Bolstering the U.S.’s manufacturing sector was one of Trump’s key campaign promises. Among other things, he promised to bring back manufacturing jobs that were lost over the past several decades as companies shifted operations to other places, such as China or Mexico.

Trump and then Vice President Kamala Harris focused on restoring manufacturing jobs on the campaign trail and Trump’s economic message resonated in states like Michigan or Ohio, which have seen some of the most manufacturing losses.

Trump has also pushed policies like tariffs in an effort to bring back manufacturing jobs.

“Under my plan, American workers will no longer be worried about losing their jobs to foreign nations. Instead, foreign nations will be worried about losing their jobs to Americans. German car companies can become American car companies. We can beat China in electronic production. Manufacturers that have left us will come sprinting back to our shores,” Trump wrote in an October Newsweek opinion article.

What People Are Saying

Senator Tim Kaine, a Virginia Democrat, wrote on X: “President Trump’s order to halt all federal grant and loan programs is illegal and dangerous. From disaster recovery, to job-creating manufacturing investments, Virginians are counting on federal resources. I’ll do all I can to urge the Administration to reverse this decision.”

Andrew Bates, a former White House spokesperson, wrote on X: “Trump and Rs promised to lower prices on “day one” & fight rich special interests. They keep doing the opposite. Trump just abused power to raise energy costs, kill manufacturing jobs, and stop child cancer research. All to cut taxes for billionaires.”

What Happens Next

The pause goes into effect on January 28 at 5 p.m. ET. Agencies have until February 10 to submit detailed information on any programs, projects or activities subject to the pause, the memo outlined.